Chapter 7 of the Bankruptcy Code in the United States governs the process of liquidation in the US. This chapter falls under the bankruptcy law. This law is concerned with the process of liquidating assets as opposed to reorganization which is handled under chapters 11 and 13. Most people within the United States who file as bankrupt usually do so under this chapter. Thus, when in need of a specialist in chapter 7 bankruptcy Hawaii is the best place to check out. Honolulu is home to some of the best experts in the field. The abbreviation C7 (chapter 7) will be used for the purpose of this paper.
It is the right of both individuals and legal persons in the United States to file for bankruptcy whenever it is necessary. The liquidation laws of the US contain options for both parties. Companies may voluntarily file for insolvency under C7 when they can no longer afford to repay creditors what they owe. Businesses that are not willing to file voluntarily may be forced into the decision by creditors to liquidate their assets through court action under C7 in a federal court.
When this kind of filling is done, the business must cease all its operations immediately unless it is operations are continued by a C7 trustee. Immediately a company files for liquidation, a C7 trustee is appointed straight away. The trustee has the power to examine the financial affairs of the business. The role of the trustee is to liquidate the assets owned by the business and distribute the proceeds that accrue from them to respective creditors.
It is not obvious for liquidation to always cause employees to lose employment. In some cases, when liquidation is being done, whole divisions are sold to buyers without altering them. Thus, only management changes, but the employees and all other aspects remain the same, even contracts of employment.
Priority is often given to the investors with the least risk when it comes to paying creditors. For instance, priority is given to secured creditors because their credit is safeguarded by collateral. Shares, vehicles, and mortgage are among the examples of collateral. Collateralized bondholders and mortgage lenders are examples of fully secured creditors. Whatever credit the company owes is protected even when the company is insolvent.
Another way of filing for C7 liquidation is by individuals. People who have businesses, reside in, or own property in the US have the right to file for liquidation under C7. This kind of liquidation is however, not available to individuals who have filed for liquidation within the last 180 days and had the cases dismissed. When one files for C7 liquidation, the law allows them to keep certain exempt property.
Different states have different rules regarding the value of property that can be considered as exempt. Besides exempt property, all other assets owned by the individual are sold by the interim trustee and proceeds are distributed to creditors. Unsecured debts are legally discharged through C7 liquidation filing.
However, discharge of certain debts is not possible even through C7 liquidation. Examples of such debts are fines, student loans, income and property taxes, court imposed restitution, and spousal and child support. From the time one files a C7 liquidation, the same is captured on their credit reports for the next 10 years.
It is the right of both individuals and legal persons in the United States to file for bankruptcy whenever it is necessary. The liquidation laws of the US contain options for both parties. Companies may voluntarily file for insolvency under C7 when they can no longer afford to repay creditors what they owe. Businesses that are not willing to file voluntarily may be forced into the decision by creditors to liquidate their assets through court action under C7 in a federal court.
When this kind of filling is done, the business must cease all its operations immediately unless it is operations are continued by a C7 trustee. Immediately a company files for liquidation, a C7 trustee is appointed straight away. The trustee has the power to examine the financial affairs of the business. The role of the trustee is to liquidate the assets owned by the business and distribute the proceeds that accrue from them to respective creditors.
It is not obvious for liquidation to always cause employees to lose employment. In some cases, when liquidation is being done, whole divisions are sold to buyers without altering them. Thus, only management changes, but the employees and all other aspects remain the same, even contracts of employment.
Priority is often given to the investors with the least risk when it comes to paying creditors. For instance, priority is given to secured creditors because their credit is safeguarded by collateral. Shares, vehicles, and mortgage are among the examples of collateral. Collateralized bondholders and mortgage lenders are examples of fully secured creditors. Whatever credit the company owes is protected even when the company is insolvent.
Another way of filing for C7 liquidation is by individuals. People who have businesses, reside in, or own property in the US have the right to file for liquidation under C7. This kind of liquidation is however, not available to individuals who have filed for liquidation within the last 180 days and had the cases dismissed. When one files for C7 liquidation, the law allows them to keep certain exempt property.
Different states have different rules regarding the value of property that can be considered as exempt. Besides exempt property, all other assets owned by the individual are sold by the interim trustee and proceeds are distributed to creditors. Unsecured debts are legally discharged through C7 liquidation filing.
However, discharge of certain debts is not possible even through C7 liquidation. Examples of such debts are fines, student loans, income and property taxes, court imposed restitution, and spousal and child support. From the time one files a C7 liquidation, the same is captured on their credit reports for the next 10 years.
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