Helping With Your Financial Future

What happens when you file for Chapter 7 bankruptcy?

On Behalf of | Oct 26, 2020 | Chapter 7 Bankruptcy

Many people in California have dreams of owning a successful small business. However, the majority of small businesses fail within the first year. A small percentage make it to five years, and a smaller percentage make it to ten years. While it might not be fun to think about, it’s important for business owners to know their options if they have to file for bankruptcy.

How can business owners file for bankruptcy?

If a small business fails, many business owners resort to Chapter 7 bankruptcy. A Chapter 7 bankruptcy essentially allows business owners to liquidate their business and walk away. Once the bankruptcy is finalized, they’ll be free from their business-related debts and can pursue other interests.

When a business owner files for Chapter 7 bankruptcy, the court appoints a trustee who takes the business assets and uses them to pay off the creditors. Once this process has been finalized, the business owner is officially discharged from their debts. They don’t have to deal with creditors anymore and can move on with their life.

However, a business owner must meet certain qualifications to qualify for Chapter 7. They must be able to prove in court that their income is too low for them to repay their debts. If their income is higher than a certain threshold, they won’t be able to file for Chapter 7.

Where can you go for help with paying off your debts?

An attorney might be able to help you pay off your debts. The attorney might be able to evaluate your assets and determine whether you qualify for Chapter 7 bankruptcy. If you do, your attorney might help you navigate the complex filing process to ensure that your debts are discharged and you walk away from the business with a clean slate.