When it comes to the growth of your business, filing for business bankruptcy might feel like the end of your business but business bankruptcy is designed to help businesses that are at the end of their road to remove or repay their debt. there are some serious financial consequences of filing for bankruptcy and you should very carefully think about the decision to file for bankruptcy and do not take it lightly. Having said that, filing for business bankruptcy is not the end of your business it is a plan for your business to survive
Filing for chapter 7 bankruptcy
Chapter 7 bankruptcy is also called or referred as “liquidation bankruptcy” or “straight bankruptcy”. It is one of the most common bankruptcy filing people use, it helps you eliminate most of your unsecured debt.
When you file a chapter 7 bankruptcy, usually after the first hearing the court designates you a trustee to see after your case, the trustee has the responsibility to sell your assets to repay the debt to the creditors from the money that was raised by selling your assets. But the trustee is not allowed to take all your assets, you are allowed to have certain of yours “exempted assets” so that you are not deprived of your needs and can stand back on your legs
EXEMPTED PROPERTIES: exempted properties are things that an individual need to maintain his life for example his residence, vehicle, retirement plans, wearing apparel, equipment for work, etc.
Qualification for Chapter & Bankruptcy:
To file the chapter 7 bankruptcy, you must first pass the “mean test”, that is they determine whether you are eligible for financial assistance, they examine your financial records and your secure and unsecured debts. A means test is normally provided by a bankruptcy attorney. You are not eligible to file for a chapter 7 bankruptcy if
- if you have too much income
- if you have too many assets
- the tax debt must be paid
- stopping foreclosure: plan for back payment
PROS and CONS
Before you make up your mind whether to file chapter 7 bankruptcy you should keep in minds the pros and cons of it, here are some pros and cons for you to make your decision carefully
- it eliminates most of your unsecured debts that include credit card bills, medical bills, payday loans, personal loans, etc.
- it gives you immediate relief, the moment you file your case the debt collectors cannot contact you and demand for payment. That means you have legal protection from loaners
- as most of the debtors who file for the chapter 7 bankruptcy have a credit score less than 600 so your credit score will be clean and you will have a fresh start
- Once you file for chapter 7 bankruptcy you are on an automatic stay, that also give you relief from a utility bill and will help you keep your electricity, water, and gas
- Chapter 7 bankruptcy takes 4 to 6 months from the date you file your case to the discharge
- Chapter 7 bankruptcy can only be filed after every 8 years
- When you file bankruptcy it stays on your credit report for up to 10 years
- If you file for bankruptcy while your credit score is more than 600 that it will go down
- It will not let you get rid of student loan