Chapter 7 bankruptcy – Can you discharge your business debts?
While you file a bankruptcy, the term discharge refers to the legal termination of a debt account. A discharged debtor can never be enforced up on a debtor. However, if there are any liens that are securing the debt, it may survive the bankruptcy case. The Chapter 7 bankruptcy is the most common form of bankruptcy that is filed by individuals and business organizations when they do not get satisfactory results from the debt settlement companies. Through a Chapter 7 bankruptcy, the debt obligations of a debtor are simply wiped away and the debtor gets the opportunity to make a fresh new start.
Many of the debts that drive most business owners to file a bankruptcy can be easily discharged through a Chapter 7 personal bankruptcy. If you own a small business organization, you may be on the brink of filing a bankruptcy due to many unfortunate financial circumstances. But before filing a particular type of bankruptcy, you must always make sure whether that bankruptcy is the right option for you. Read on to know whether or not Chapter 7 helps a business organization discharge its debts.
* Chapter 7 covers those debts for which you’re personally liable
If you’re the owner of your business, or you are the sole proprietor, you’re personally obligated towards all the debts that your business incurs. Therefore, if such a business organization incurs debt, it can be easily discharged through a Chapter 7 bankruptcy. On the contrary, if your business is a LLC or a Limited Liability Company, you’re only personally liable to pay for some business obligations if you’ve signed them or guaranteed them. Or else, the LLC has to take responsibility of all such debts and file business bankruptcy.
* You may require closing your business if you file Chapter 7 bankruptcy
If you’ve already taken the decision that you want to get rid of all your business debts by filing Chapter 7, you must consider the pros and cons of doing so. The bankruptcy court may always want you to close your business temporarily when you file a Chapter 7 bankruptcy for your business debts. Some business owners with few operating assets can run their business while filing Chapter 7. Therefore, you must consider such consequences before taking the plunge.
Business debts like medical debt, credit card debts, lease and contract debt, debts on personal loans and promissory notes and unsecured business debts can be wiped off with Chapter 7. If you want to give a fresh new start to your financial life, you can consider filing a bankruptcy than seeking help of debt settlement companies. Abolish your debts and lead a stress free life.