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Bankruptcy may sound like a dirty word, but it can mean a new beginning if it used correctly to settle debts or reoganize your finances. Both individuals and companies can file for bankruptcy, and understanding the differences can make it easier to know how to pursue it as a correction to dire financial straits.

What’s the difference between personal and corporate bankruptcy?

An individual and his or her personal assets and liability are the subjects of personal bankruptcy, while the legal entity of a company and any assets or liabilities in the company’s name are involved in a corporate bankruptcy.

When are corporate assets the subject of a personal bankruptcy?

It is rare that a corporate bankruptcy affects personal assets in Pennsylvania, but a company’s asset may be used to settle debts under bankruptcy protection if a person filing for personal bankruptcy is the sole or majority owner of the company. For example, a couple in Ligonier filed for bankruptcy and listed their mortgage on a restaurant property as a liability.

Does it matter if a corporate asset is listed in personal bankruptcy filings?

The couple in Ligonier did not list the property as an asset, but they listed the mortgage as a personal liability. The property may be sold anyway to settle debts because one of the filers is the sole officer of the company holding it and the mortgage constitutes most of the couple’s liability.

Do I need a lawyer to file bankruptcy?

Anyone can file for bankruptcy on his or her own, but there is no guarantee that a bankruptcy court will grant protection. An attorney may increase the chances of a successful filing that gives relief and a fresh start to debtors.  For additional information, please visit our website at www.quinnfirm.com or call to speak with one of our bankruptcy attorneys at 814-833-2222.