When you seek to declare bankruptcy (Chapter 7, 11, 13) you file for bankruptcy. When we are discussing a discharge of a debt, we are referring to the legal termination of a debt account attributed to a business. Once a debt has been discharged, it can never be imposed upon the debtor again. This would not apply however if there exists any liens (a form of security interest granted over an item of property to secure the payment of a debt ) securing the aforementioned debt. In this case the discharged debt may in fact survive the bankruptcy filing.
A bankruptcy chapter 7 personal filing may be able to easily allow for the discharge of many of the debts that may be plaguing a business. If you are a small business owner and you are considering a bankruptcy claim (who isn’t in this economic climate) you must make sure you select the best bankruptcy option for you, often with specific advice provided by a bankruptcy lawyer
If you are the listed owner or operating as a sole proprietor of the personal, as fair as any governing body is concerned you are considered personally liable for all debts incurred in your companies name. If this is the occurrence you find yourself in, a Chapter 7 bankruptcy claim may well be the best choice, allowing you to discharge your debts.
If however your business is a LLC (a Limited Liability Company) you will only be held responsible to provide recompense to some of the companies debts. From here the LLC would take responsibility and file for business bankruptcy claim.
With the decision needing to be made on whether to abolish all your business debts by filing a chapter 7, you must seriously consider all the pros and con’s for doing so. A bankruptcy claim will always leave a mark on your financial records and may make lending much harder in the future. The courts may also suspend your business temporarily whilst filing for a Chapter 7 to protect assets. On occasions some companies are able to operate their business whilst undertaking a bankruptcy filing.
Debt is debt, credit card, medical, leave or contract. To avoid debt and requiring the protection offered by Chapter 7 bankruptcy, one must focus on correct money management. It is a case of living within your means, avoiding using credit cards where you know you will struggle to make the repayments and if you do happen to require a bankruptcy claim learn from the experience and do not let it happen again.