Businesses may file bankruptcy under different chapters of the Federal Bankruptcy Code.

Chapter 7 is a complete liquidation of business assets and debts.  At the end of the process the firm will be debt free.  However, in order to ensure there is no further liability to the sole proprietor, shareholders, officers, board members or partners of the business, the business must go through the proper steps needed to wind down the business entity with the state within which it was organized.  This involves several documents that need to be filed and prepared.  Failure to do so may subject the stakeholders of the business to personal liability on subsequent debts or liabilities that were not discharged in the “liquidation”.

Chapter 11 is a reorganization of the company’s debts.  A trustee is appointed to manage the business and a plan to reorganize the debts is developed by the company, the creditors or other stakeholders.  This plan is then submitted to the bankruptcy court for approval.  Once the plan is approved and after the plan has been implemented and completed, the company is able to operate without having to liquidate all of their assets or cease operations.

Chapter 13 is a Consumer Bankruptcy chapter.  However, a sole proprietors may also qualify for discharge of debt under this chapter.   The Stevenson Law Group does not perform Consumer Bankruptcy or other out of bankruptcy debt workouts.  Nor does the firm litigate claims against consumer creditors under the Fair Debt Collection Practices Act or the Fair Credit Reporting Act.