Thread: Alternatives to Chapter 7

Debtors should be aware that there are several alternatives to chapter 7 relief. For example, debtors who are engaged in business, including corporations, partnerships, and sole proprietorships, may prefer to remain in business and avoid liquidation. Such debtors should consider filing a petition under chapter 11 of the Bankruptcy Code. Sole proprietorships may also be eligible for relief under chapter 13 of the Bankruptcy Code.

Chapter 7 Bankruptcy is a liquidation bankruptcy. That means the trustee sells off all non-exempt assets held by the debtor so that the debts can be repaid to the fullest extent possible.

But in Chapter 11 Bankruptcy the debtors can still be in business and reorganize to play creditors while maintains ownership of all assets.