Your options: Chapter 7 bankruptcy and debt reduction
Chapter 7 bankruptcy, which is most commonly known as liquidation bankruptcy, is usually the type of bankruptcy you enter if you need to liquidate your assets to pay down your debts. Is Chapter 7 bankruptcy always necessary when you’re in heavy debt? No, and there are plenty of options you can try that your attorney can speak to you about.
Chapter 7 bankruptcy is an option that you can consider, even if it doesn’t end up being the option you go with. For instance, if you run a business and close due to debt, you may want to consider other ways of paying off your debts and consolidating what you owe. For example, if you owe $30,000, consider the assets you still have. Can you give an asset back to the creditor to get money off what you owe? Sometimes, creditors will eliminate your debt if you return the item you have, especially if it’s machinery. If that machinery, for example, was worth $15,000, then you’d only have another $15,000 to worry about. Now that the number is looking more affordable, what else can you do?
If you didn’t use your own personal assets as collateral, a Chapter 7 bankruptcy for your business could be a good option, since it won’t affect your personal assets. The remaining debt could be eliminated through this method of debt relief. If you did guarantee your own personal assets, then it can be more complicated.
Our website has more information on what to do if you’re in this position or one like it. You have many options to consider before you decide to enter into bankruptcy.