Filing business bankruptcy is a federal process overseen by the U.S. Trustee Program. In any type of bankruptcy, a committee is assigned by the trustee that will represent the company’s stockholders and credit lenders to ensure a fair outcome. Although it may not feel like it at the time, the ultimate goal of business bankruptcy is to help you find financial stability once again. In all bankruptcies an automatic stay is issued. This legally stops all collections, foreclosures, evictions, and lawsuits.
The process behind Chapter 7 in business bankruptcy is fairly straightforward: The requirements to file bankruptcy are that a trustee is responsible for redistributing the assets to the creditors and overseeing the liquidation process. They run meetings between all the parties and ensure fair distribution. You won’t have much control over the proceedings and, when it’s all said and done, you will be free to pursue your next project.
The effects of bankruptcy will vary largely depending on what kind of bankruptcy you file, your financial situation after bankruptcy, and how responsibly you manage the process of rebuilding your credit.
It may be difficult to secure credit or larger loans for a time. Financial responsibility after bankruptcy can minimize the effects somewhat, and some credit card companies actually seek out individuals who have just filed for bankruptcy to get them as a customer.