It can be frightening for owners to learn that a company has declared bankruptcy. They may not be able to recover from the loss of all their hard work.
What happens to your personal assets? This is the most important question people have. What happens to everything they’ve worked so hard for?
What Are the Various Types of Bankruptcies Available?
Bankruptcy provides debt relief to individuals, businesses, and other entities that are unable or unwilling to repay their debts. There are many types of bankruptcies. Each has its own eligibility requirements.
Chapter 7, also known as liquidation bankruptcy, is the most popular type of bankruptcy. Chapter 7 bankruptcy sees the debtor sell his assets and use the proceeds to pay creditors. Chapter 11 bankruptcy (reorganization bankruptcy), and Chapter 13 bankruptcy are two other types of bankruptcy. These bankruptcies adjust debts for individuals with regular income.
You may have to use your personal assets if your business is a sole proprietorship, partnership, or corporation to repay business debts.
Your personal assets are usually protected against creditors if your business is a limited liability or corporation. There are exceptions. If you personally guarantee a loan for your company, the creditor might be able to take your personal assets to pay the debt. If you have combined personal and business assets, the court might allow creditors to seize your personal assets in order to settle business debts.
Bankruptcy can be a complicated legal process. If you are thinking of filing bankruptcy for your company, it is important to talk with someone who can help protect you.
This post was written by Trey Wright, one of the best bankruptcy lawyers in Florida! Trey is one of the founding partners of Bruner Wright, P.A. Attorneys at Law, specializing in bankruptcy law, estate planning, and business litigation.
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