Creditors’ Rights 9
A: In October, the rules change and the Chapter 7 option will be gone for many people. Chapter 7 bankruptcy, typically known as a “straight liquidation,” is when the debtor has all of his/her debts forgiven. One of the provisions of the new bankruptcy law requires debtors to pass certain “means testing” that will determine whether they are eligible for Chapter 7. If a debtor’s income is above minimum prescribed standards, the debtor must proceed under Chapter 13 and repay at least a portion of his/her unsecured debts. As a business owner, this should be more helpful in collecting debt, as it will be more difficult for individuals with higher income to discharge their debt. However, we strongly suggest that you do your due diligence before extending credit so you don’t end up having to file in court to get what is owed to you. As creditors’ rights attorneys, we help our clients develop processes to ensure that they are extending credit to creditworthy clients.
