Chapter 7 Bankruptcy Definition

Short Definition
Chapter 7 bankruptcy is a legal proceeding initiated when a business cannot pay its debts and is going to liquidate the company.

Expanded Definition
Chapter 7 bankruptcy is one of three bankruptcy options for a small business. With Chapter 7 bankruptcy, a trustee sells your assets and pays down the debts owed to creditors. The business is then closed.

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Bankruptcy: Options for Small Business