By Ullian Associates of The Law Firm of Ullian & Associates, P.C. on June 17, 2020
If you are closing down your small business because of financial reasons, you may wonder why you should spend money to file a Chapter 7 bankruptcy. The answer is to get closure and peace of mind. If you just shut your doors then you will have creditors chasing you for the money owed. I will use the example of Joe who owns Joe’s Pizza Palace, Inc. Once Joe ends his business, any vendors and credit card companies that are owed money will be calling and writing to Joe’s Pizza Palace, Inc. demanding payment. The creditors may also file lawsuits against Joe’s Pizza Palace, Inc., which will require Joe to defend against the lawsuit on behalf of his company. A Chapter 7 bankruptcy stops all collections actions against Joe’s Pizza Palace, Inc.
A Chapter 7 bankruptcy also eliminates the headaches and stress of dealing with secured creditors. For example, Joe’s Pizza Palace, Inc. took out a loan from First Bank to purchase a new pizza oven last year and First Bank now has a security interest in that oven. The Pizza Palace also buys candy bars and chips that it sells on credit from Second Best Foods. Instead of Joe (on behalf of his company) dealing directly with First Bank and Second Best Foods, the Chapter 7 Trustee will coordinate to return the secured items to the lien holders. The Chapter 7 Trustee will also be able to terminate the lease of a rental property. Additionally, if there are items such as tables, chairs, pots, and pans, then the Trustee will oversee a sale of these items. All of this eliminates the time-consuming headaches for Joe, which would limit his ability to move forward in some other job opportunity.
If you are considering closing down your business and have questions about filing a Chapter 7 bankruptcy, give us a call to schedule your free consultation today. Zoom appointments are available.