Filing Chapter 7 Bankruptcy as a Business
The news headlines are filled with stories about big corporations filing for Chapter 11 bankruptcy, but what about filing Chapter 7 bankruptcy for business? Are there any benefits in filing a Chapter 7 bankruptcy for your business?
Well, maybe, let's take a look:
If a business owner wants to completely close his/her business and liquidate its assets, filing a Chapter 7 bankruptcy for their business may be beneficial. For example, if you know that your debt-laden business is dead and cannot be revived, a Chapter 7 bankruptcy filing may be wise. When a business files Chapter 7 bankruptcy, the bankruptcy trustee takes over the company's finances, liquidates the business' assets and distributes the proceeds to the creditors.
If a business owner owes "priority" debts such as taxes and wants to make sure that those taxes are paid from the business assets, using Chapter 7 bankruptcy to do so may be beneficial. During Chapter 7 bankruptcy, a business' assets are liquidated and the proceeds are used to repay "priority" creditors first, so that the owner does not need to worry about paying those debts after the liquidation of the business. Be forewarned, a business entity does not receive a Chapter 7 bankruptcy discharge, discharge is reserved for individuals only. Please speak with your Dallas-Fort Worth bankruptcy attorney to find out which type of bankruptcy filing will work best for your business.