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Oil company owner files for Chapter 7 bankruptcy

Many Tennessee business owners understand that economic conditions can change fairly quickly, which can have a major impact on the business's profitability. The same is true for the business owners' personal finances, as circumstances outside the control of the individual may have a major impact on the person's financial health.

Sometimes, the two are tied together, as a person's business struggles can bleed over into their personal finances as well. For instance, the owner of an oil company recently filed for Chapter 7 bankruptcy shortly after his company suddenly closed its doors. The man had apparently guaranteed hundreds of thousands of dollars of his company's debt.

In his Chapter 7 filing, the man listed about $703,000 in assets, as compared to $1.25 million in personal debt. The debts were primarily business related, although he also listed two mortgages worth about $534,500. The man also listed monthly income of $3,338, with monthly expenses of over $4,300.

Typically, in filing for Chapter 7, the individual must meet certain eligibility criteria, one of which looks at how much income the person makes. The person's income generally must be at or below the median income of their state, with each state maintaining different guidelines.

If the person's income is above that level, the person then may have to take a means test, which analyzes the person's debt and income from the previous six months. The test is geared toward discovering whether the person has left over income to pay off creditors, which might make other options like Chapter 13 a better fit. Ultimately, each person's case will be different, and therefore the person should consult a qualified bankruptcy attorney to determine what their options are and what type of bankruptcy would work best for them.

Source: Lehigh Valley Live, "Richard Norton, owner of Norton Oil Co., files for Chapter 7 bankruptcy," Matthew Bultman, Dec. 18, 2013

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