Chapter 7 bankruptcy, which is available in New York and the rest of the U.S., is used to liquidate property to pay back debts. There are several alternatives to this kind of bankruptcy, which is something to consider if you’re thinking of filing for Chapter 7. For example, if you run a business — partnership or sole proprietorship — then you may be able to avoid liquidation and to stay in business if you choose instead to file for Chapter 11 bankruptcy relief.
With Chapter 11 relief, you can seek to adjust your debts by either reducing them or extending the amount of time you have to pay the money back. Interestingly, as a sole proprietor, you may also seek relief under a Chapter 13 bankruptcy.
Chapter 13 bankruptcy is best used by those who have an ongoing income. For instance, if you have a job or are still in business with a profit, then this may be a choice you could go with. Realistically, Chapter 13 bankruptcy allows you to create a payment plan and to work off the debts instead of having to worry about foreclosure or liquidation techniques.
If you’re still interested in filing a Chapter 7 bankruptcy, then you need to know how to qualify. The debtor in question may be an individual, partnership, corporation or business. You may not have had a bankruptcy case dismissed from court in the previous 180 days or receive too much income each year to qualify for the bankruptcy. If you earn over the state limits, then you could have the case dismissed as “abuse” of the bankruptcy claim.
Source: US Courts.gov, “Alternatives to Chapter 7” accessed Jan. 15, 2015by