The Key Differences Between Consumer and Business Chapter 7 Bankruptcy
Good afternoon everybody. Edward Kelly, your bankruptcy attorney here with another in our ongoing series, Three Minutes to Financial Freedom. In this video, we’re going to talk about what are your options in bankruptcy for a consumer versus a small business.
Consumer Bankruptcy
The first rule is that a business cannot get a discharge in a Chapter 7 bankruptcy. So most of you are looking at that Chapter 7 liquidation. As an individual, you can get a discharge, but your LLC cannot get a discharge.
So what does that mean and why would an LLC, corporation, or any business entity, small or not, ever do a Chapter 7? Well, for you, as an individual, you can discharge your personal liability. Even if your LLC has no assets or has a significant amount of debt, all you need to worry about is your personal liability. By filing for Chapter 7 bankruptcy, you can eliminate the transfer of those debts to your personal assets.
Small Business Bankruptcy
Now, let’s look at why a business would do Chapter 7 bankruptcy. First, you may want the trustee to manage your assets. Secondly, you may want a definitive status of all debts that have been disposed of, even if they are not discharged. For example, if your business has $50,000 in assets, you can file for Chapter 7 bankruptcy and have the trustee dispose of those assets on your behalf. This way, you can avoid multiple lawsuits from different creditors trying to foreclose on your company’s property or on company-owned vehicles.
Although you won’t receive a discharge, it won’t matter because there will be no assets left by the end of the case. Additionally, if you have any personal liability, which is often the case, you can also file for Chapter 7 bankruptcy for yourself.
Reach Out for a Free Consultation
These are the options for Chapter 7 bankruptcy for consumers versus small businesses. If you have any questions or need further assistance, please feel free to reach out to me directly at oklahomacitybankruptcyattorney.pro or call me at (405) 563-7888. I offer a free consultation to discuss your specific situation and provide guidance on the best course of action.</