2. What is the difference between a Chapter 7 Bankruptcy and an Assignment for the Benefit of Creditors?
- Functionally they are much alike. The Assignee, like a bankruptcy trustee, liquidates the assets and reduces them to cash and, after paying the expenses for the ABC makes distributions to creditors.
- An ABC, unlike a bankruptcy, is not court supervised in most states
- More often than not distributions to creditors are made more quickly through an ABC
- ABCs are generally less expensive than a bankruptcy because the assets may be liquidated and distributions can be made to creditors without governmental oversight or court approval
