Orange County Bankruptcy Basics

No two bankruptcy cases are the same, but there are several large classifications of bankruptcies designed to fit the majority of people's and businesses' circumstances when it comes to filing for bankruptcy relief. Most bankruptcies fall under two main categories - liquidation and reorganization. Depending upon whether you are filing for bankruptcy due to personal debt, business debt, or some combination of the two, you may need to file one type of bankruptcy vs. another. In some instances, such as when a sole proprietor goes bankrupt, there may need to be two bankruptcy cases - one to cover the business debts, and another to protect the personal assets of the businessman.

Personal Bankruptcy - Orange County Bankruptcy

Personal bankruptcy is generally one of two types -  Chapter 7 or Chapter 13. In a Chapter 7 bankruptcy, non-exempt assets are sold in order to cover as much of the debt as possible, while still allowing the debtor to keep ownership of certain types of property. Depending upon the exemptions you claim and your personal financial situation, you may be able to keep your house, car, and/or most of your possessions. Chapter 13 bankruptcy, on the other hand, is designed to allow for a reorganization of debt - certain priority debts must be paid in full, along with some secured debts. Unsecured debts need not be paid in full, but you will be required to pay as much to these creditors as they would have received under a Chapter 7 filing. Chapter 13 repayment plans typically last anywhere from 3-5 years, and during that time, you will be expected to live under a court-enforced budget that applies all discretionary funds towards paying off your debts.

Business Bankruptcy - Orange County Bankruptcy

If you own a business, you can also file for Chapter 7 liquidation, which works much the same as it does in a personal bankruptcy - your business assets will be sold in order to pay off creditors. Your business will be closed, and you will be free of most types of debt once they are discharged by the bankruptcy. If you wish to remain in business, a Chapter 11 bankruptcy may be able to allow you to do so, provided that you can get an agreement from your creditors. During a Chapter 11, you will be required to make payments, much as in a Chapter 13 bankruptcy. However, in a Chapter 11 case, you may be able to act as your own trustee, and you may be able to use some funding to improve your business, in some circumstances.

Bankruptcy for Family Farms and Fisheries - Orange County Bankruptcy

If you own a farm or a fishery, there are special laws that apply to your bankruptcy filing. Under a Chapter 12 bankruptcy, you have to prove that you get your annual income from the farm or fishery, and that your debts are largely related to the operation of the farm or fishery. This, in addition to some income and debt requirements, differentiates a Chapter 12 filing from other reorganization filings. However, if you do file for a Chapter 12 bankruptcy, you may be able to save your business, catch up on debts you owe, and emerge from bankruptcy stronger as a result.

These are only a few examples of the types of bankruptcies that may apply to your situation. If you are thinking aboutfiling for bankruptcy but you aren't certain if you qualify, or if you need help deciding on what type of bankruptcy to file, contact our offices today. We will arrange for a free initial case evaluation that will help you to understand bankruptcy law in Orange County, and how you can take advantage of bankruptcy laws to gain peace
of mind and a secure financial future.

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