People who are filing for bankruptcy on behalf of their business may have to liquidate some company assets and might initiate the process of bankruptcy as a means of protecting themselves from personal financial liability after they close that business. Oftentimes, Chapter 7 bankruptcy is part of a plan to close a company permanently.
However, Chapter 7 bankruptcy is also an option when an entrepreneur recognizes that their business could fail without some major changes. It can also be useful for those who have a struggling business that could thrive if they could move past a few prior mistakes. Chapter 7 bankruptcy can allow Mississippi business owners to protect some of their crucial company assets while getting rid of certain unsecured debts.
There are exemptions available for certain property
Federal bankruptcy law creates a list of exemptions, but unfortunately, Mississippi does not allow people to use those federal exemptions when they file. Instead, only state exemptions are available. There are real estate exemptions and wild card exemptions that can help people potentially protect their most valuable business assets when they file for bankruptcy.
Although a Chapter 7 bankruptcy is technically a liquidation bankruptcy filing, only those who have property beyond what they can exempt under Mississippi state law have to worry about the trustee selling off their company assets. It is often possible to preserve crucial business assets while simultaneously discharging unsecured business-related debts in a Chapter 7 bankruptcy.
If the process is successful, it will end with a discharge of unsecured debts that will help the company better balance its budget. Some companies go from being in the red to being in the black within a few months after a successful filing eliminates financial obligations draining the company’s resources.
Fixing a company’s finances will require support
Using Chapter 7 bankruptcy to get rid of business debts while preserving key company assets can be a challenging undertaking. Entrepreneurs and business owners that have the right help will have much higher chances of success.
Learning more about Mississippi’s rules for Chapter 7 bankruptcy can help those who are hoping to preserve their personal resources and business with a timely filing. Seeking legal guidance is a good first step.