A typical Chapter 7 bankruptcy case is relatively straightforward. You will spend most of your time completing the bankruptcy petition, schedules, and other forms, which will require you to list your debts, assets, financial transactions, and so on. Once you've filed your paperwork, the bankruptcy trustee takes over your case.
Each bankruptcy chapter offers unique benefits that will differ depending on whether you or your company files for bankruptcy. Understanding these dynamics will help you choose the best solution for your small business needs during the coronavirus pandemic.
If you are married and considering bankruptcy, you'll have to decide whether to file separately (that is, only one spouse files for bankruptcy and the other is not part of the case) or jointly (both spouses file together).
Chapter 11 bankruptcy can be a good option for debtors who want to reorganize their debt in order to keep their assets. A key part of any Chapter 11 case is the debtor’s plan of reorganization. The plan of reorganization outlines how the debtor will pay back creditors over time.
Both Chapter 11 and Chapter 13 bankruptcy provide a way for people struggling with debt to keep their property by reorganizing their debt. Chapter 11 bankruptcy is generally more popular with businesses, but it can be a good choice for certain individuals, especially those with extremely large amounts of debt. For most individuals, however, Chapter 13 bankruptcy is often cheaper and easier.
A Chapter 7 bankruptcy proceeding can be initiated in two ways—by a voluntary or involuntary bankruptcy filing. An involuntary bankruptcy starts with a creditor or group of creditors filing a Chapter 7 bankruptcy case against an individual or corporation that owes them money. Learn about your options.
Whether you file for Chapter 7 or Chapter 13 bankruptcy, it's important to determine which of your unsecured debts will be classified as priority debts and which will be assigned to the nonpriority category.
When you file for Chapter 7 bankruptcy, you don't have to directly repay any of your debt. Instead, the bankruptcy trustee may take any property you own that isn't exempt, sell it, and distribute the assets to your creditors. Once this process is complete, you will receive your bankruptcy discharge, which wipes out all debts that can be discharged in bankruptcy.