Too Much Asset or Property.
The biggest limitation and drawback of Chapter 7 Bankruptcy that I see as a Sacramento Bankruptcy Attorney is that some clients have too much property. If your property is not exempt or protected under the California exemptions, you risk losing that property. The Bankruptcy Trustee will sell the nonexempt property and use the proceeds to repay your creditors. For example, be careful if you have a house with more equity than the amount that California exemption can protect. You should consider Chapter 13 Bankruptcy instead. Chapter 13 Bankruptcy will put your debt in a repayment plan. Chapter 13 Bankruptcy does not always mean that you have to pay back ALL your debts. How much debt you have to pay back is based on your “disposable income” (call Sacramento Bankruptcy Attorney Muoi Chea for the calculation for disposable income) and the amount of nonexempt property.
Continue Operation of Your Business without Interference
The next biggest limitation and drawback is business owners who wants to keep their business. The Bankruptcy Trustee might take control over your business. Remember, Chapter 7 Bankruptcy is liquidation and Chapter 13 Bankruptcy is reorganization. In a Chapter 7 Bankruptcy, you risk losing your business to liquidation if it is worth a lot of money or more than what the California exemption can protect. Most businesses I dealt with as a Bankruptcy Attorney in Sacramento, Stockton, Fairfield, California are worth more than the amount that is provided for in the California exemption. In those cases, you should consider filing Chapter 13 Bankruptcy as a reorganization of your debt. In a Chapter 13 Bankruptcy, you can continue running your business without interference from the Bankruptcy Court or worry about the Court selling your business.
Muoi Chea is an experienced Sacramento Bankruptcy Attorney serving Sacramento, Stockton, Fairfield, CA. She has been a bankruptcy attorney for over 10 years representing consumers and small business owners in Chapter 7 Bankruptcy and Chapter 13 Bankruptcy proceedings in Sacramento Bankruptcy Court and Modesto Bankruptcy Court.