The Difference Between Business And Individual Chapter 7 Bankruptcy

If you live or work in the United States, or own a business here, and you are having difficulty with your finances to the point that you are literally beyond recovery, you need to start researching attorneys in Omaha who can help you decide whether you are a candidate for bankruptcy proceedings.

Businesses that have become financially troubled and have more debt than they can reasonably hope to pay back, may be forced by their creditors to file for federal bankruptcy under Chapter 7. This means the business has to cease operating and be assigned a Chapter 7 Trustee who has broad federal power to analyze the business and help liquidate all assets and use the proceeds to pay off creditors. This sounds harsh, but employee jobs can actually be saved by selling an entire division to another company. Creditors cannot participate in the purchasing of the assets, only the payment of the debt. Your bankruptcy attorneys in Omaha will help protect you with this law so creditors won’t file abusive forced bankruptcy against you to take your property. Once a business has declared Chapter 7 bankruptcy, the company is dissolved.

Chapter 7 for an individual is quite different, though the principle is the same. Individuals can receive a bankruptcy discharge, meaning that while the individual must liquidate their assets, certain assets are protected such as their home and a secured car loan. Other assets are sold, if the individual has anything else, and those proceeds are used to pay towards creditors, after which the creditor accounts are declared legally paid off. The debts that cannot be discharged in a Chapter 7 bankruptcy include child and spousal support, student loans, criminal fines and property taxes.

Another form of bankruptcy is called Chapter 13, in which an individual can rearrange the debt payments they owe to creditors, and ask for some of their unsecured debt to be dismissed. In this case, the filing stays on the credit record for only 7 years instead of 10. It is a good option for those wanting to pay creditors in full on better repayment terms.

While the effect on your credit score for filing bankruptcy can be devastating, some attorney in Omaha and other large cities believe that the reports are over exaggerated. This is because by the time you are to a point where you have to declare bankruptcy, your credit is likely already ruined, so filing bankruptcy may not affect it much more.

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