Thu. Feb 29th, 2024

What You Should Know About Chapter 7 Bankruptcy

Federal bankruptcy laws allow individuals and businesses to reduce or restructure their debt and prepare for the future. During financial difficulties, when incomes are reduced while their debt increases, companies may be considering bankruptcy. Although three types of bankruptcy exist, Chapter 7 bankruptcy Edmonds WA is the quickest, easiest bankruptcy solution.

Who Should Use Chapter 7

Chapter 7 bankruptcy is often called liquidation. Liquidation is necessary when a business has no future. For example, if the business’s debt is so high that there is no feasible way to pay it, and even restructuring this debt won’t help. Businesses without a lot of assets are prime candidates for Chapter 7.

However, if a sole-proprietor has substantial assets or a high income, this may not be the best bankruptcy choice.

Filing Process

The initial step should be seeking credit counseling with a qualified nonprofit agency. Then, business owners need to find a reputable bankruptcy attorney who helps them file all their paperwork and bankruptcy petition. This step should be done quickly because it prevents any creditor from seizing their assets.

Next, the court appoints a trustee, who will manage the bankruptcy process, including determine what assets will be sold to pay the debts. Business owners will then meet with their lawyers and creditor to review the process and their paperwork. All collateral is returned to secured-debt creditors before a case is completed. If business owners have not already completed a credit counseling or financial education course, they may have to compete one prior to discharging the case.

The case should take three to six months to complete, and at the end, the business’s debts should be forgiven.

Qualifications

Individual income, assets and expenses are compared to determine whether you have the means to pay off their debt. In addition, those seeking Chapter 7 bankruptcy cannot have filed for bankruptcy within 180 days but was dismissed or completed a Chapter 7 or Chapter 13 bankruptcy within the last 8 and 6 years, respectively.

If you are overwhelmed by debt and don’t have a lot of assets, consider working with a reputable bankruptcy attorney on a Chapter 7 bankruptcy.