The chapter 7 bankruptcy code allows your trustee to sell all you own and pay your creditors. Since this bankruptcy code may lead to loss of property, it is critical to examine other more lenient alternatives. As a debtor, you should understand that there are several alternatives, and this code is not the sole way to pay your debts.
According to the United States Courts, if you want to remain in business and protect your assets from liquidation, then you can file for chapter 11. This chapter provides fairly reasonable options that can still help your business thrive. Under it, you may either adjust your debt, reduce or increase the pay period or reorganize the debts.
For sole proprietors, chapter 13 may also serve as an alternative. This chapter allows you to adjust your debts and also prevents foreclosure of your home. Generally, under chapter 13, you can develop a payment plan and catch up with overdue payments.
Also, it is worth noting that your chapter 7 may face court dismissal if your debts are more of consumer-related than business-related. If the courts grant you relief for consumer-related debts, it will mount to abuse of the chapter.
Therefore, under chapter 7, you may apply for a means test whose objective is to determine whether it may be abusive to grant you relief. If your net monthly income for the past 5 years is more than $12850 or it is more than 25% of your non-priority secured debt that is higher than $7700, granting you relief under chapter 7 will be abusive.