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Federal Laws in the United States of America are compiled in the form of U.S.C. (United States Code. It is a collection of different Titles, each comprising various Chapters. Chapter 7 (Title 11) concerns liquidation issues, as part of the country’s bankruptcy laws. Chapter 7 is a commonly prevailing bankruptcy procedure in the country. It affects varying entities differently.
When a business is majorly in debt and cannot repay its creditors, it may file for bankruptcy in the Federal Court under Chapter 7. However, it is not always a self initiative. There are numerous instances where creditors force the business to commence bankruptcy proceedings.
The next step marks the end of business operations. After this, a Chapter 7 Trustee is appointed. This is followed by selling the assets to repay creditors, that is, liquidation. Sometimes, entire verticals of one organization are sold to another as part of liquidation; hence employees keep their jobs.
Permanent U.S. residents are allowed to file for Chapter 7 bankruptcy. A major distinguishing feature of personal bankruptcy is the freedom to keep exempt property. It prevents certain property from being seized or sold off to repay creditors.
Aside from negative connotations, it is also an opportunity to start afresh. In the process of recovering from bankruptcy, the individual develops an organized way to repay creditors and attempts to give a fresh start to their credit history.
Bankruptcy may be caused by numerous types of debts or a combination of any of them. These are:
Debt does not necessarily imply bankruptcy. There may be various other contributing factors, such as:
Renewed Credit Reports
Timely Bill Payments
Using New Credit Wisely