Debt Relief. Thinking about bankruptcy in such terms is the first step in no longer allowing any information gap-related anxiety from getting in the way of educating yourself about bankruptcy. Chapter 7, like other types of bankruptcy, is about relief. In bankruptcy's chapter 7 form, this relief is in the form of liquidation. Chapter 7 liquidation, as spelled out in the U.S. Bankruptcy Code, is "the sale of a debtor's nonexempt property and the distribution of the proceeds to creditors." When focusing on the positive, on relief, the words "nonexempt property" should jump out.
Bankruptcy does not amount to losing everything and starting over from scratch precisely because significant portions of a debtor's property are exempt from the selling off liquidation process in chapter 7 bankruptcy. In the simplest terms, you retain ownership of exempt property before, during, and after Chapter 7 bankruptcy. In identifying and retaining property exempt from liquidation in the chapter 7 process, the skill of an experienced San Jose bankruptcy law attorney is paramount.
Who Is Eligible for Relief under Chapter 7 of the Bankruptcy Code?
Filing for chapter 7 relief is first a question of eligibility, and second a question of intention. Eligible debtors that may qualify for relief under chapter 7 of the Bankruptcy Code include individuals, partnerships, corporations, and other business entity. As this a very wide swatch, the importance of the second question is apparent. Put simply, do you want to remain in business or not?
If you wish to remain in business, chapter 7 may not be the appropriate choice as its very nature is that of liquidation. For those that wish to remain in business, the reorganization (rather than liquidation) of debt, as made possible by chapters 11 and 13, is the path forward. When reorganization is undertaken, a central focus is the crafting of a repayment plan that at once allows you to remain in business while and assures the business's creditors of modified repayment.
The Expertise Needed to Navigate Bankruptcy's Complexities
A prerequisite to a chapter 7 filing is the application of what the U.S. Bankruptcy Courts term a "means test." In the application of this test, the debtor's current monthly income is compared to median monthly income in the debtor's state. In navigating the complexity of this test and all other bankruptcy-related filings, the skill of an experienced San Jose bankruptcy law attorney is an invaluable resource.
Source: http://www.uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/chapter-7-bankruptcy-basics