There are a couple of different types of bankruptcy. Chapter 7 and Chapter 13 are the most commonly known because these are available to individuals. There are also additional types for individuals in special circumstances, such as farmers.
And then there are the business versions. Chapter 7 and Chapter 11 are the most common, and they each serve a different purpose. The main difference between Chapter 7 and Chapter 11 has to do with the future of the business, but there are other differences as well.
Discharging Debts
Only a Chapter 7 bankruptcy can discharge debts completely. If a business has to file bankruptcy, they may be closing the business as well. Not all cases are like this, though. In some cases, the business simply needs to reorganize its debt so more manageable payments can be made toward the creditors that are owed funds by the business. Click here for more information on Chapter 7 bankruptcy (http://www.zerodownbankruptcy.com/Chapter-7/).
A discharge of debts means you are free and clear of the debts you listed on your bankruptcy, or at least, the ones approved by the bankruptcy court. Once this happens, your creditors can no longer contact you regarding your debt because it simply is not yours anymore. This is the route businesses take when the owners just want to start over.
Reorganizing Debts
Individuals who want to reorganize their debts will file a Chapter 13 bankruptcy. Businesses, however, are not allowed to use Chapter 13, so they file under Chapter 11 instead. Chapter 11 is a version of bankruptcy that allows businesses to reorganize their debt for a limited period of time. This method allows the business to keep the doors open, and it also allows the business to make payments that are manageable enough to allow them to both meet ongoing overhead costs and keep up with past debts at the same time. For more information about bankruptcy in Florida, click here (http://www.zerodownbankruptcy.com/).
How to Choose Between Chapter 7 and Chapter 11
In today’s world, branding means quite a bit. Businesses spend a lot of time and money trying to make a name for themselves. Some will try to retain that name at all costs so they can also retain the reputation they have developed. In such cases, Chapter 11 is the route to take because it allows the business to stay open. Chapter 7 does not allow for this, so a business that files a Chapter 7 will have lost the effort put into brand development.
Benefits of Each Type
While Chapter 7 means that a business loses the effort put into branding, it also means that there aren’t any further obligations afterward. Those who own the business are free to start up a new business that sells the same type of product or service.
The difference for them is that the new business will benefit from the knowledge gained from the mistakes made in the first one. Chapter 11 has its own benefits as well, given that the branding can still be useful. In the end, the choice is based on what the owners envision as a future for their business. If nothing else, the owners walk away with the knowledge they gained from the experience.
Please share this post online with friends and family members who may be considering Chapter 7 or Chapter 11 bankruptcy.
Related Links:
Florida Bankruptcy Attorneys
http://www.zerodownbankruptcy.com/
Chapter 13 Bankruptcy
http://www.zerodownbankruptcy.com/bankruptcy-lawyer-st-petersburg-florida/Chapter-13/
Florida Chapter 7 Bankruptcy Lawyer