Chapter Seven & Eleven Bankruptcy
Chapter 7 requires the liquidation of all non-exempt property. The proceeds will be used to pay creditors. A discharge of all allowable debts is done in roughly four months. The gives a “fresh start” to an individual or couple who is overwhelmed by mounting debts.
Credit that you obtained by providing false information cannot be discharged. Luxury items purchased for more than $500 within the 3 months prior cannot be discharged. Cash advances and loans for more than $750 within 70 days prior cannot also be discharged.
- You should consult an attorney with your questions
Business Bankruptcy (Ch. 7 & 11)
Under Chapter 11, a company reorganizes in an attempt to become profitable. The business management runs the daily operations, however any major decisions must be made by the bankruptcy court.
Under Chapter 7, the business goes completely out of business and everything is liquidated to order to pay the debts
-What happens to any stocks or bonds that were issued?
The business may continue to trade after a Chapter 11 bankruptcy is filed. The majority of businesses who file Chapter 11 cannot meet the standards to trade on the stock exchanges. However, there are no laws preventing trading. Under a Chapter 7 bankruptcy, all stocks and bonds become worthless.
Most businesses choose Chapter 11 over Chapter 7 because they can continue to operate and remain in control of their assets. The companies who are excessively in debt and cannot stay operational daily choose Chapter 7 and close their doors permanently.
- Chapter 11 is the most expensive and complicated but has no ceiling as to the amount of debt. A trustee may be appointed to ensure debts are repaid, if the company's management of finances is questionable.