Bankruptcy is not the right choice for everyone, but it could be the right solution for you if you own a business and find that you are being harassed for payments that you cannot make, you are only able to make the minimum amounts on bills, you have experienced a serious financial difficulty, such as losing a major client or you find that you cannot get out of unsecured debt within the next five years. When filing for bankruptcy in California, it is important to keep in mind that California business bankruptcy law will not wipe out all forms of debt. Specifically, you will still be responsible for child support, alimony, student loans, recent back taxes, recent large purchases and certain cash advances.

California business bankruptcy law allows business to file straight bankruptcy under Chapter 7. This type of bankruptcy is often referred to as liquidation because it allows partnerships and corporations to liquidate their assets and pay creditors. Only nonexempt assets will be liquidated. In some situations, the bankruptcy becomes what is known as a non-asset case because there are not any nonexempt assets which can be sold. Following changes in bankruptcy laws in 2005, it is no longer possible for everyone to qualify for a Chapter 7 bankruptcy filing. Per California business bankruptcy laws, your income must be below a specific amount in order to pass the income test and qualify to file for Chapter 7 business bankruptcy. If your income level is over the specified amount then the law takes into consideration your vehicle and mortgage payments along with child support, back taxes and school expenses. If the income that is left over after these amounts are deducted from your income will allow you to pay at least $100 per month to creditors of unsecured debt then you will not be eligible for Chapter 7 bankruptcy. In this case, California business bankruptcy allows a business to file for Chapter 11, which allows the business to develop a repayment plan, restructure their business and continue operating. It should also be noted that applicants of all forms of bankruptcy are required by law to obtain approved credit counseling before they will be able to file bankruptcy.

If the business is eligible to file for Chapter 7 bankruptcy then a petition will be filed with the court along with a document known as a statement of financial affairs. The statement will contain a detailed list of all debts including secured debts, unsecured debts and taxes. It will also contain contact information for creditors as well as a listing of assets.

Assets which are considered to be exempt are determined by California business bankruptcy law. California business bankruptcy allows for two different exemption options. Both options allow for jewelry up to a specific amount, burial plots, a motor vehicle and a wild card. When filing for bankruptcy in California, it is best to consult an experienced business bankruptcy attorney to determine the best option based on your circumstances.

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