Many people say that starting a business is a gamble. The saying may be true, but without the risk, our communities would not grow and our economy would stagnate. Yet, for many, their businesses do not turn out the way they hoped and they find their business drowning in overwhelming debt. Those who are struggling with debt should consider their options to find debt relief. As one business has recently found, a Chapter 7 bankruptcy may be the best route.
Carbon Motors, a company that made a purpose-built police car and operated out of Indiana, has filed for Chapter 7 bankruptcy. According to court documents, the company has assets in the amount of $19,000 while their liabilities equate to nearly $22 million. The company originally contracted to sell several motors to BMW, but failed to move the business forward when it was denied a federal loan. Faced with so much debt, bankruptcy was likely the business' only option to avoid creditors.
Chapter 7 is often referred to as a liquidation bankruptcy because it allows a company to discharge debt after a court appointed trustee sells the company's non-exempt assets to pay creditors. However, if a business owner elects to file for Chapter 7 bankruptcy rather than Chapter 11 bankruptcy, the business will have to completely shut down. Reorganization of debt is not possible under Chapter 7 bankruptcy. However, liquidation of business debt under Chapter 7 can give business owners a fresh financial start without fear of creditor harassment or unmanageable bills.
Filing for bankruptcy can be a complicated process. Assets must be classified, secure and non-secure creditors identified, and debts assessed. The legal structure of the business may also play a vital role. Those who own a business and are drowning in debt owe it to themselves to seek out an experienced bankruptcy attorney who can walk them through the complexities and help them find a new beginning.
Source: Pal-item.com, "Carbon Motors files Chapter 7 bankruptcy," Pam Tharp, Jun. 12, 2013