As discussed previously in this blog, when Colorado business owners find themselves deep in debt, they need effective solutions to eliminate that debt and start anew. Chapter 7 bankruptcy is one of the most effective options business owners have for eliminating debt, but it can get confusing for business owners how the process works when both the business and the individual need relief.
Part of the confusion may arise because individuals may not know whether they can obtain relief under certain chapters of the Bankruptcy Code. Businesses and individuals often file under different chapters, although this is not always the case. Businesses, for example, might file under Chapter 11, while it may be necessary to file under Chapter 7 for individuals involved in the business.
For instance, one businessman recently found himself filing for Chapter 7 just two days after his company filed for bankruptcy under Chapter 11. The man was a real estate developer, and both he and his company were involved in a civil trial brought by investors of a development that failed to get off the ground. As a result of the separate filings, the man's Chapter 7 case is proceeding separately from the business's bankruptcy in Chapter 11.
Chapter 7 may be an effective option for both businesses and individuals alike under certain circumstances. Both must typically meet certain eligibility requirements. For instance, individuals must meet certain income requirements before they are eligible. Individuals and business owners should consult a bankruptcy attorney to determine whether Chapter 7 or another chapter might be right for them.
Source: Times Free Press, "Chattanooga businessman Allen Casey files personal bankruptcy," Mike Pare, Feb. 27, 2014