According to the United States Bankruptcy Code, the business must cease operations upon filing for this form of bankruptcy unless it is maintained by a trustee, who can be appointed to analyze and evaluate the company's financial situation. The trustee has the authority to sell all company assets and distribute the proceeds to the company's creditors. Depending on the outcome of the claim, a company may lose an entire division, but that does not inevitably mean that all of the employees will be laid off. If you own property that you do not wish to forfeit, Chapter 7 is not for you.
When you search for information on Chapter 7 bankruptcy, you will discover that it is very different from filing for Chapter 11 or Chapter 13. For this form of filing, the company permanently closes its doors, and individuals are given a fresh start through the liquidation of their assets and discharge of their debts. In order to be evaluated for eligibility, debtors who wish to file for this form of bankruptcy must pass a 'Means Test'. If they fail the test, they are given a second opportunity to file for Chapter 13 bankruptcy.
According to the Administrative Office of the U.S. Courts, millions of consumer bankruptcy petitions are processed annually, typically with a percentage increase over the previous year. Financial experts expect bankruptcies to continue to rise, especially as unemployment continues to increase. In response to the recent economic crisis that has impacted every state in the United States, businesses and consumers are filing for bankruptcy to regain their financial standing.
It is essential to note that some states impose a limit on the amount of personal assets required to file for Chapter 7 bankruptcy. If you believe you can maintain your assets while paying off all other obligations, declaring bankruptcy should not be an option. In addition, you should be aware that the purpose of filing chapter seven is to be released from your financial creditors' debts. Your bankruptcy claim may be denied if the court finds substantial evidence that you committed any type of fraud. Remember that other obligations, such as student loans, taxes, credit cards, and criminal restitution, can still be discharged.""
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