Most people think a Chapter 7 bankruptcy is only an option for individuals, but certain businesses can also pursue this option. There are differences between the Chapter 7 bankruptcy processes for individuals and for businesses, and our Toms River lawyer can help you with your case.
If your business is struggling with debt, bankruptcy might be the right option. We can answer questions about whether a Chapter 7 bankruptcy or another part of the Bankruptcy Code might be the best path forward. Talk to our compassionate business bankruptcy attorneys today to learn more.
A Chapter 7 bankruptcy can provide different outcomes for businesses, depending on their structure. For sole proprietorships, filing under Chapter 7 is essentially the same as filing as an individual. Since the business and the owner are legally the same entity, the owner may receive a discharge of qualifying debts at the end of the process. This means that both personal and business obligations can be wiped out, giving you a chance at a fresh financial start. However, business assets may be liquidated to pay creditors, which can make it difficult to continue operating after the case is complete. For individual debts, we are often able to discuss options beyond liquidating assets.
For corporations, limited liability companies, and partnerships, a Chapter 7 bankruptcy works differently. These entities are not eligible for a discharge, meaning that while the bankruptcy process can be used to wind down operations and liquidate assets in an orderly manner, the debts are not erased. A major benefit is that these business entities do not need to pass the means test, which applies only to individuals. A Chapter 7 bankruptcy provides a structured way to close the business, sell assets, and distribute funds to creditors. It allows business owners to formally end operations while reducing legal and financial complications.
There are a lot of details to consider when deciding whether to file for bankruptcy. Reach out to our attorney today to discuss Chapter 7 bankruptcy options for your Toms River business.
The support of a legal team can be invaluable during every phase of a Chapter 7 business bankruptcy in Toms River. Before the formal proceedings begin, you will need to determine the goals for your business. If the hope is to remain open after the end of the bankruptcy process, other options, such as a Chapter 11 bankruptcy, might be a better fit.
Once you decide to pursue a Chapter 7 bankruptcy, the process formally begins by filing a petition with the bankruptcy court. The moment this happens, you are immediately protected by the automatic bankruptcy stay. Creditors can no longer attempt to collect your debts or even contact you about a delinquency. However, creditors involving child support obligations or secured debts can petition the court to remove the stay and allow their collection efforts to continue.
A Chapter 7 bankruptcy process also includes a meeting with your creditors and the bankruptcy trustee. The trustee will determine if there are any eligible assets that can be liquidated to satisfy your debts, but our attorneys are often able to exempt important assets from being sold. At the end of the Chapter 7 bankruptcy process, you will receive a discharge of your remaining debts if you filed as an individual.
If you are facing the potential end of your business (whether a sole proprietorship, LLC, or partnership), bankruptcy might provide you with a way to avoid collection efforts and resolve your remaining obligations. In some cases, you might even be able to discharge some business-related debts and continue operating. Contact Gillman Capone and schedule a consultation with a Toms River Chapter 7 business bankruptcy lawyer to learn more.
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