Though once a taboo topic, bankruptcy is now receiving recognition as the tool that it is meant to be. In many cases, it can aid people in gaining the fresh financial start they need.
In particular, a Chapter 7 bankruptcy can be helpful for entrepreneurs. For those considering this option, there are a few important factors to be aware of in order to gain the full benefit of the bankruptcy process.
It is a fact that many businesses fail within their first year. In many cases, this failure can leave the owner with serious financial debts. One of the most beneficial features of the Chapter 7 bankruptcy is that it can allow business owners to completely detach themselves from the business, including the debt that goes along with it.
When preparing to file for a Chapter 7 bankruptcy, it is important to understand the filing types that parties will need to submit, which depends upon their business status. If the business is a sole proprietorship, it is a part of the owner, and therefore the owner would only need to file a personal bankruptcy.
On the other hand, if a party has an LLC or another type of corporation, the business is separate. Therefore, the party will need to file a business bankruptcy. If the business owner wants to remove all ties with the company and stop negative actions, such as repossession, the owner will also need to file a personal bankruptcy.
Different bankruptcy processes have their own qualification process in accordance with federal regulations. In regards to a Chapter 7 bankruptcy, applicants must pass a means test that deams their income to be below a certain level.
Understanding these aspects can be beneficial in deciding the best route for you in your financial situation. Take some time to weigh your options and understand the full commitment that a bankruptcy entails.