Many people in New Jersey know that when a business goes bad, it can make personal finances difficult. This can led to some having to file for both a personal and business bankruptcy. This is what happened to one couple recently in another state who sought a Chapter 11 bankruptcy.
According to a report that may seem familiar to some readers in New Jersey, the couple owned a business that failed during the recent recession. That business sought bankruptcy protections in 2011. Not long after, the former owners of the telemarketing company filed for personal bankruptcy protections.
The case is now making news because the court may change the chapter that it uses in the personal bankruptcy. The couple filed for a Chapter 11 bankruptcy restructuring of their debts, however, the case may now become a Chapter 7 total liquidation. If that occurs, the couple may be forced to liquidate some of their assets to repay creditors, such as the IRS and a state taxing authority.
The decision as to which chapter of the bankruptcy code to file in a case can be difficult for some in New Jersey and elsewhere. The applicable rules can provide information to assist in making the choice. For those who find that they have a business that has gone bad and has left them unable to repay their personal creditors, choosing a Chapter 11 bankruptcy can be a good decision. However, such individuals may find it helpful to seek information as to which chapter to file before entering into the process and beginning a fresh financial future.
Source: GoErie.com, "Erie judge asks Covattos for more details in bankruptcy," Ed Palattella, Feb. 2, 2013