What is the difference between Chapter 7 and Chapter 13 bankruptcy?
February 27th, 2016 by New World Collections
Bankruptcy filing continues to be on the rise in the US economy. As an operating business, getting bankruptcy notices regarding customers who used your services is definitely a negative impact on your bottom line. However, there is a difference between Chapter 7 and 13 that can benefit your business if you understand your rights with the filing.
First and foremost, it is a violation to contact anyone for which you have received notice of bankruptcy. Chapter 7 bankruptcy completely removes a person’s debt obligations altogether. However, Chapter 13 is a reorganization of debt with a bankruptcy trustee and intent to pay back their debt obligations. In a Chapter 13 case, it is beneficial to file your claim for the Meeting of Creditors as it gives you a chance to recover money on the debt owed to you.
With Chapter 13, secured creditors such as banks always get the first distribution of funds. Unsecured creditors such as an everyday business operation is last on the list. What this means is your business will usually not recover the full amount of the debt. However, you will get something as long as you file paperwork to the bankruptcy trustee office.
Getting bankruptcy notices are never a good thing for your business. But knowing the difference between the two can help in recouping some of that money back
Comments are closed.