Demystifying Bankruptcy: Personal vs. Business

by: Attorney Noyes

3/28/20242 min read

Navigating the complexities of bankruptcy can be daunting, but understanding the key differences between personal and business bankruptcy is crucial for making informed decisions. At Noyes & Associates, we're here to shed light on these distinctions and help you chart the best course forward.

Personal Bankruptcy:

Personal bankruptcy is designed to provide relief for individuals overwhelmed by debt. There are two main types:

1. Chapter 7: Also known as "liquidation" bankruptcy, Chapter 7 involves selling off non-exempt assets to repay creditors. Many types of debts can be discharged, giving individuals a fresh start.

2. Chapter 13: Commonly referred to as "reorganization" bankruptcy, Chapter 13 allows individuals to create a repayment plan to settle debts over three to five years. It's often chosen by those with regular income who want to protect their assets.

Business Bankruptcy:

Business bankruptcy is aimed at providing relief for struggling businesses. The two primary forms are:

1. Chapter 7: In business Chapter 7 bankruptcy, the company ceases operations, and a trustee sells off its assets to repay creditors. Once this process is complete, the business typically closes its doors permanently.

2. Chapter 11: Chapter 11 bankruptcy allows businesses to reorganize their debts while remaining operational. This option is often chosen by larger corporations seeking to renegotiate contracts, leases, or debts to stay afloat.

Key Differences:

• Scope: Personal bankruptcy addresses an individual's debts, while business bankruptcy deals with the debts of a business entity.

• Asset Treatment: In personal bankruptcy, exemptions protect certain assets from being sold to repay debts. In contrast, a business bankruptcy may involve the sale of business assets to satisfy creditors.

• Repayment Plans: Chapter 13 bankruptcy offers a structured repayment plan for individuals, whereas Chapter 11 bankruptcy allows businesses to propose their own reorganization plans.

Why Choose Noyes & Associates for Bankruptcy Guidance?

Navigating bankruptcy requires careful consideration of legal options and strategic planning. At Noyes & Associates, our experienced bankruptcy attorneys are well-versed in both personal and business bankruptcy laws. We'll assess your unique financial situation and guide you through the process to achieve the best possible outcome.

If you're facing overwhelming debt and considering bankruptcy, don't navigate this complex process alone. Reach out to Noyes & Associates for compassionate legal guidance and expert representation. Let us help you find the right path toward financial stability and a fresh start.