SA-Bankruptcy.com

Business Bankruptcy

Locations

Free Consultation

Bankruptcy 101

Credit Information

Should I File?

Bankruptcy Exemptions

Bankruptcy Dictionary

Chapter 13

Chapter 7

Contact Form

First Name:*

Last Name:*

E-mail:*

Phone:*

City:

Description of your case:*

*Required Fields

Business Bankruptcy

Federal bankruptcy law helps businesses deal with their debt by allowing them to either request a complete liquidation under Chapter 7 of the Bankruptcy Code or a repayment plan under Chapter 13. To take advantage of a complete liquidation under Chapter 7, most businesses must close its doors. The business that opts for the repayment plan under Chapter 13 may remain open. An individual who operates a business as an unincorporated sole proprietor (other than stock and commodity brokers) can use Chapter 13 of the Bankruptcy Code to repay debts but only by filing as an individual and including the business-related debts for which he is personally liable.

Chapter 7

Bankruptcy under Chapter 7 of the Bankruptcy Code is often referred to as “liquidation bankruptcy” or a "straight bankruptcy.” Under Chapter 7 most businesses must cease all operations and allow the Bankruptcy Court to liquidate all assets to pay the debts. All types of business entities may use Chapter 7.

A business debtor begins the bankruptcy process by filing a petition with its local bankruptcy court. Once the petition is filed, an “automatic stay” goes into effect and the creditors are prohibited from making any attempt to collect their debt, including attempting foreclosure and repossession. Along with the petition, or shortly thereafter, the debtor files various written “schedules” and “statements” to inform the Court of its outstanding debts, its current income and expenses, any existing contracts, any current or potential lawsuits, and any recent asset transfers. Upon receipt of the Petition, the Court appoints a Bankruptcy Trustee to handle the debtor’s case. The Trustee collects and sells the assets of the business and uses the proceeds to pay off the creditors. Once the Trustee sells all of the assets and distributes the proceeds, the Bankruptcy Court discharges the remaining debt and concludes the bankruptcy proceeding.

Chapter 13

Chapter 13 is only available to sole proprietors. Sole proprietors cannot use Chapter 13 to file bankruptcy obly for the business. Sole proprietors must file as individuals to take advantage of Chapter 13 but can include business debts for which they are personally liable.

If your business is overwhelmed with debt, contact our Law Firm today. We can help you decide if bankruptcy is for you. The only thing you have to lose is your debt. Regain your peace of mind. 1-800-862-1260.