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FREE PROS & CONS: CHAPTER 7 BANKRUPTCY
CHAPTER 7 BANKRUPTCY
* Will delay 3 to 4 months and can stop foreclosure depending on mutual payment (s) agreement between
mortgagor and mortgagee with bankruptcy court approval and decree which takes 3 to 4 months.
* Will delay 3 to 4 months and can stop garnishment of wages depending on mutual payment (s)
agreement between garnishing creditor and garnished employee with court approval and decree.
* Will delay 3 to 4 months and can stop repossession of vehicle depending on mutual payment (s)
agreement between lender and vehicle owner/borrower with court approval and decree.
* Can eliminate a portion or all of the bankrupt's debt especially credit cards.
* If petitioner can't afford $306 filing/administration fee, petitioner may petition court to pay in installments
or have the entire fee waived via court order/decree (see forms in Chapter 7 Bankruptcy Simplified/CD.
* Filing bankruptcy can become emotional and sometimes make the petitioner (s) feel like failure (s).
* Credit reporting agencies keep bankruptcy on your credit profile for a number of years, usually ten.
* Credit card companies will charge you higher interest rates.
LIMITED LIABILITY COMPANY
* Favorable Income Tax: LLC combine the best of corporate and partnership attributes if properly
structured. It will be taxeds as a partnership. This means only one level of taxation.
* Liability Protection: The debts of an LLC are exclusively the debts of the LLC. Thus, a LLC is distinct from
it's members, who are not proper nor necessary parties to lawsuits against a LLC.
* Control & Simplicity: The ability of the LLC to control benefits are available without the myriad of
restrictions faced by partnerships and corporations. Such LLC benefits are governed by a
contract/agreement between the owner/members referred to as an operating contract/agreement.
* Generally, there are far less disadvantages of LLC's as opposed to advantages. Thus, the following
listings include some of the disadvantages of LLC's.
* For the most part, small businesses and their principal owners likely will be required to personally affix
signatures to bank loans, leases and various other legal documents and provide personal guarantees.
* LLC owner/members will still be held liable for nonpayment of federal and state, especially, payroll
income taxes and state income taxes. This is also true of city, county and state taxes
* Corporations maybe created within perpetual succession or for a given period of time.
* Personal liability of the shareholders is generally limited to the amount of money invested in the
* A corporation is a separate entity apart from the owners (Shareholders) and as such can establish credit,
purchase and sell land, enter into contracts, sue and be sued.
* A corporation can lessen the tax burden of it's shareholders by compounding it's earnings, provided such
compounding is not unreasonable and is for a proper business purpose.
* A corporation's capital can be increased by authorizing the issuance and selling additional stock such as
; common stock or treasury stock.
* Ownership shares of a corporation can easily be transferred to family members such as a widow, without
difficulty or dissolution.
* A corporation's federal income tax rates may be less than an owner's individual tax rate.
* Corporations do not pay on money it receives in exchange for shares of stock.
* Corporations have more tax options open to them than proprietorships or partnerships. Provisions can
be made for pension plans, profit sharing and stock options that are favorable to the shareholders
* In the event of death of an owner or principal, a corporation can continue.
* Owners of corporations pay personal tax on dividends and the corporation pays corporate tax on profits,
thus constituting dual taxation.
* Generally, corporation's are unduly burdened with considerable formalities such as processing large
amounts of paper work.
* A corporation who commits an ultra vires act may have its charter revoked, while a proprietorship or
partnership may continue to engage in business. An ultra vires act is an act wherein a corporation has
* Keeping corporate records ,may involve considerable time and skill.
* Depending on the level of sophistication a given corporation is operating on, it may require any number of
professionals such as accountants, lawyers, bookkeepers etc, thus running into perhaps considerable
** PLEASE NOTE: We do not provide legal advice!!!
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Angeles, San Diego, Las
Vegas, Phoenix, San
Berkerly, San Jose,
Portland, Seattle, Dallas,
Houston, New Orleans,
Orlando, Fort Lauderdale,
Philadelphia, New Jersey,
New York, Detroit,
Chicago . . .
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