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    three types of bankruptcy - chapter 7, 11, and 13

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    Your committee chairman has revealed that your supervisor wants you personally to prepare a report discussing the following options for a client who is in serious business trouble. Your firm's client just recently revealed that his company was $2.9 million in debt and that his company is not incorporated. He has reluctantly asked if your firm could advise him on the process of bankruptcy.

    Address the following in your report:

    * Define and summarize the benefits of different types of bankruptcy.
    * Explain if the client can file Chapter 7 bankruptcy.
    * Explain if the client can file Chapter 11 bankruptcy.
    * Explain if the client can file Chapter 13 bankruptcy.
    * Discuss the benefits and drawbacks of the client filing bankruptcy.
    * Discuss how the type of bankruptcy would differ if the client's company was owned by a partnership.
    * Give advice whether or not the client should file bankruptcy. If so, what type of bankruptcy should the client file?

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    Solution Preview

    * Define and summarize the benefits of different types of bankruptcy.

    Overall there are several benefits of bankruptcy. Most of the debts are discharged, prevents the creditors from making collecting attempts, and stops property from being repossessed. Further, the benefits of different types of bankruptcy are that they stop the foreclosure process giving more time for repayment, stops garnishment of salary/wages, does not allow utilities from being cut off, and if there are false claims it gives time to dispute them.

    * Explain if the client can file Chapter 7 bankruptcy.
    Yes, the client can file Chapter 7 bankruptcy. In this case the business of the client will cease immediately. A Chapter 7 Trustee will be appointed by the court and the Trustee will sell all the assets of the company and pay the proceeds to the creditors. In case of Chapter 7 if the $2.9 million creditors have collateral they will have a legally enforceable right to the collateral. Please remember that Chapter 7 means the client wants to close ...

    Solution Summary

    This answer provides you an excellent discussion on three types of bankruptcy - chapter 7, 11, and 13

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