Bankruptcy is the process of a company or organization going bankrupt. A company can file a petition if it is unable to or unwilling to pay its financial obligations. The petition includes a list of all assets and liabilities.
Different types of bankruptcy
Many small businesses file for bankruptcy to avoid financial ruin. Over the years, the market has seen a decrease in the number of organizations that survive. These are the three types mentioned in bankruptcy law.
Regular Income and Adjustments to Debt
To adjust the debts, regular income is used. This type of bankruptcy is often used by individuals. This petition is only for sole proprietorships that cannot be different from their owners. The sole proprietorships want to reorganize. This petition can not be filed. The petition explicitly mentions the form of payment to creditors.
Liquidation
This bankruptcy option is available to businesses that have no future and cannot survive. This petition is for the sole purpose of liquidation. This bankruptcy petition can be used by corporations, sole owners, and partnerships. When the future of the company cannot be rebuilt, this petition can be filed.
Business Reorganization
This is the best option if businesses have a chance to return to the market in the near term. This bankruptcy can be used by corporations or partnerships. Sole proprietorships with income exceeding a certain amount can also use this type of bankruptcy. This is an important step.
This post was written by Trey Wright, one of the best bankruptcy Tallahassee attorneys! Trey is one of the founding partners of Bruner Wright, P.A. Attorneys at Law, which specializes in areas related to bankruptcy law, estate planning, and business litigation.
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