When Colorado residents enter into agreements with each other, they typically expect that the other person will perform his or her end of the bargain. While this may usually be the case, there may be special circumstances that arise from time to time that make it impossible for a person to fulfill a previous agreement. For example, when one party suffers from unexpected financial setbacks, they may find it nearly impossible to perform on a contract that was previously entered into.
This was the case for one company in another state that provided snow removal services. The company recently had to file for Chapter 7 bankruptcy after experiencing financial difficulties. The company had sent out notices to customers advertising early bird discounts a few months earlier. However, due to its financial problems the company then was unable to fulfill the services promised to customers.
Typically, when a person or corporation files for Chapter 7, also known as straight bankruptcy, they must not only list all their assets and liabilities, but also provide a schedule of executory contracts and unexpired leases. Executory contracts are generally those that are still pending, or that have not yet been completed, such as the agreements entered into by the snow removal company with its customers.
While a person may otherwise have been obligated to perform on the contract he or she entered into, through Chapter 7, the individual may be released from that obligation. The contract would then be discharged, along with the person's other debt. In doing so, the person can regain financial control and obtain a fresh start on their financial life.
Source: WZZM, "Bankruptcy may leave snowplow customers out in the cold," Peter Ross, Nov. 14, 2013