Although bankruptcy is often prompted by similar factors for both consumers and businesses, there are several differences between the two. Business bankruptcy can be filed by a corporation or by an individual with mostly “business debt.” A consumer bankruptcy on the other hand is filed by an individual with “consumer debt” such as houses, cars, credit card debt or medical bills. Either may be filed to eliminate or reorganize debt.
Sometimes, an individual may file for both consumer and business bankruptcy. This would happen if the individual has personally guaranteed a good portion of their business expenses and the business is not going well.
Although consumer and business bankruptcy are filed for similar reasons, the specific aim of bankruptcy is different for each. For a business, Chapter 11 bankruptcy allows for reorganization of assets so creditors can be paid off. It also provides a window of time for a sale of the business to take place. Another option is a Chapter 7 bankruptcy, which is available to a business that is closing and liquidating its assets.
On the other hand, consumers may file for bankruptcy to avoid foreclosure, since filing gives them an automatic stay. An automatic stay temporarily halts foreclosure proceedings, which can provide the opportunity for an emergency bankruptcy filing. Consumers who want to file in a hurry need only provide basic information such as name, address, and Social Security number instead of dealing with a lot of paperwork.
For your FREE consultation, call The Law Offices of JacksonWhite today to speak with an experienced Arizona bankruptcy attorney at (480) 648-8975.