When many people consider bankruptcy, they often believe that it is akin to the "Get Out of Jail Free" card in Monopoly. While there are many valid reasons to consider declaring personal bankruptcy, it is also important to understand the ramifications of doing so. Those in Kentucky considering this path may want to consider some tips that can assist them in placing themselves in the best financial position prior to seeking bankruptcy protection.
Simply put, income is the primary difference between these two types of bankruptcy. A Kentucky resident has to be below a certain income level in order to qualify for Chapter 7 (commonly referred to as a liquidation bankruptcy). If an individual's income is higher than that demarcation point, a Chapter 13 (commonly referred to as a reorganization) will need to be filed.
In the past, many in Kentucky may have considered filing for bankruptcy protection to be the end of the road for a company. However, in recent years, more and more companies have started to look at filing Chapter 11 as a way to rid themselves of unprofitable holdings and emerge healthy and viable. Recently, Last Call Guarantor LLC, a chain that includes the brands Fox & Hound, Bailey's Sports Grille and Champps, became the fourth such company to file for bankruptcy this year.
There comes a time when many businesses must make the smart decision to either drastically change their strategic initiatives or to seek other avenues in order to protect investors. At times, it may be prudent for a company to seek bankruptcy. Kentucky readers may be interested in a recent article written about Golfsmith International, which is seriously considering filing for Chapter 11 bankruptcy protection.