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Alternatives to a Chapter 7 Bankruptcy filing
- Do Nothing. You may simply do nothing and allow your creditors to sue you and get
judgments. The creditors will then attempt to collect on the debt by garnishing your wages, leving your bank accounts,
and putting liens on your real and personal property. If you own a business, the creditor may pay the Sheriff to
come and take the money out of your cash register, or do a third party levy on others that owe you money. Another
disadvantage of this approach is that the attorney's fees, court costs, and interest will continue to increase the amount
due to your creditors.
- Settlements or Credit Counseling. There are several alternatives to filing
a Chapter 7 Bankruptcy. Those considering filing bankruptcy should realize that out-of-court or settlement agreements
with your creditors and/or credit counseling services may provide an alternative to filing bankruptcy.
- Chapter 13 Bankruptcy. Individual debtors who have regular income through employment or self-employment may seek an adjustment of
debts under Chapter 13 of the Bankruptcy Code. A Chapter 13 Bankruptcy will help individuals who have too much equity in their assets, who want to stop a foreclosure
to save their homes, or force the IRS, Franchise Tax Board, and the County of Kern to accept payments over time for tax debt
that is otherwise, non-dischargeable in a bankruptcy case. The Chapter 13 Bankruptcy is a reorganization bankruptcy that allows you to cure default and forces your creditors to accept payment
over time of up to 5 years.
- Chapter 11 Bankruptcy. Those in business who are engaged in business, such as partnerships, corporations, and sole proprietorships
(who do not qualify for Chapter 13 Bankruptcy) may prefer to avoid Chapter 7 Bankruptcy's liquidation and remain in business. In a Chapter 11 Bankruptcy, the debtor may seek an adjustment of debts, either by reducing the debt or by extending the time for repayment, or may seek
a more comprehensive reorganization.
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