Home Chapter 7 Bankruptcy Understanding the Purpose and Usage of Chapter 7

Understanding the Purpose and Usage of Chapter 7

Understanding the Purpose and Usage of Chapter 7

When people or businesses apply for Chapter
7 bankruptcy, unless their claim is an attempt at an abuse of the system,
it is something of a last resort for them. Especially with regard to
liquidation of assets, Chapter 7 bankruptcies involve loss in a very
tangible sense, as those who file for this course of action must live with the
decision to permanently dispose of many of their possessions
which will have an impact on them both physically and emotionally


It should be noted that Chapter 7 bankruptcy
is different from Chapter 13 bankruptcy
sé. Chapter 7 bankruptcy generally does not allow for applicants to keep their
property the way Chapter 13 bankruptcy does, unless those assets are
specifically exempt from being reclaimed.


Though this may not be a pressing concern of
owners and contributors with a financial stake in a company,
business-oriented Chapter 7 bankruptcies may also be a means of selling
the rights to the organization without getting rid of everyone involved.
Specifically, those employed by a corporation filing for bankruptcy may not
necessarily lose their jobs, as the buyers, following liquidation, may choose
to incorporate both the infrastructure of the old entity and the employees who
helped maintain it. Under such a scenario, the luckiest of these workers would
become new agents of the larger association that absorbed them.