A Chapter 7 bankruptcy effectively closes down a business and liquidates its assets to generate funds for distribution to creditors. If you are a struggling business owner, an attorney can advise you regarding your bankruptcy options and help you decide if it is the best solution for your situation.
Filing for bankruptcy requires a multitude of documents to be prepared and submitted to the court. The documents include detailed lists of personal and business assets and losses. A lawyer will help collect the necessary information and prepare and file the documents.
The bankruptcy code allows you to exempt some business and personal assets from being sold to settle the debts. Federal law lists categories of permitted exemptions, but each state also has its own list of permitted exemptions. A person who files for bankruptcy can choose which set of exemptions to apply in his or her case. A lawyer can advise you on which exemptions are best for your circumstances.
Because the business was floundering, selling off its assets may not raise enough funds to fully pay every creditor all that is owed. Depending on factors such as whether the debt is secured or unsecured, a creditor may be paid anywhere from zero to 100 percent of the debt.
Creditors dissatisfied with the amount the trustee has allocated to them may challenge the court’s discharge of your debts and claim that you may not have completely declared all the assets or dispute the valuation of business and personal assets you asked to be held exempt from the bankruptcy.
Should these or other legal skirmishes arise, your legal counsel can respond to such challenges on your behalf.