Colorado business owners understand the cost of business often require taking out loans from others. While this debt is an ordinary course of doing business, the debt can cripple the business when unexpected changes put pressure on the business's revenues.
For instance, the recent economic crisis is still affecting many businesses years after it initially hit, as business owners are struggling to overcome their debt. For these business owners, Chapter 7 bankruptcy may be necessary to obtain debt relief.
One business owner recently filed for Chapter 7 for this very reason, after struggling with debts incurred after the economy's downturn. The business owners ran a property rental management business for 30 years. They found bankruptcy to be an attractive option for dealing with the dozens of creditors who had claims against them. Their goal is to try and keep the oldest of their businesses from running through the liquidation process.
The claims involved large debts and smaller unsecured debts. The latter of these will not likely receive any recovery after the bankruptcy, as recognized by some of these creditors who were owed small unsecured debts.
It is typical in bankruptcy for unsecured debts to be wiped away after bankruptcy. While there is a liquidation process in bankruptcy, the proceeds from that process will usually go toward secured creditors, who hold priority in the process. In any event, the debtor will typically receive a discharge of the debt, which allows the debtor to start fresh and reset their personal finances. Legal professionals specializing in bankruptcy are available to assist those who are struggling with debt and determine the best path towards a fresh start.
Source: Seacoast Online, "York broker petitions for Chapter 7 bankruptcy," Susan Morse, Feb. 19, 2014