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Bankruptcy Synopsis

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Overview of the different types of bankruptcy, their pros and cons, and a guide to which kind of bankruptcy you may be eligible for. Created by Laura Wineland.

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Bankruptcy Synopsis

  1. 2. March of the Spiny Lobster Oroville Modesto Berkeley San Francisco
  2. 3. Chapter 7 Bankruptcy <ul><li>What is it? </li></ul><ul><ul><li>Liquidation </li></ul></ul><ul><li>Pros </li></ul><ul><ul><li>Very fast </li></ul></ul><ul><ul><li>Good for closing down a business </li></ul></ul><ul><ul><li>Eliminates most debts right away </li></ul></ul><ul><ul><li>Inexpensive </li></ul></ul><ul><ul><li>Available to businesses and individuals </li></ul></ul><ul><li>Cons </li></ul><ul><ul><li>Does not wipe out creditors right to repossess collateral (liens) </li></ul></ul><ul><ul><li>Does not stop action against co-debtors (personal guarantees) </li></ul></ul><ul><ul><li>If you have substantial equity in your home, it may be sold </li></ul></ul>
  3. 4. Chapter 11 Bankruptcy <ul><li>What is it? </li></ul><ul><ul><li>Reorganization </li></ul></ul><ul><li>Pros </li></ul><ul><ul><li>Business continues to operate </li></ul></ul><ul><ul><li>You continue in control of business </li></ul></ul><ul><ul><li>You propose work-out plan </li></ul></ul><ul><ul><li>Clean up your balance sheet </li></ul></ul><ul><ul><li>Force a nasty creditor to negotiate </li></ul></ul><ul><li>Cons </li></ul><ul><ul><li>Does not immediately discharge debts </li></ul></ul><ul><ul><li>More expensive </li></ul></ul><ul><ul><li>Can take a year or more to emerge from bankruptcy </li></ul></ul><ul><ul><li>Like chapter 7, does not eliminate liens or personal guarantees </li></ul></ul>
  4. 5. Chapter 13 Bankruptcy <ul><li>What is it? </li></ul><ul><ul><li>Personal Reorganization </li></ul></ul><ul><li>Pros </li></ul><ul><ul><li>Simplified process </li></ul></ul><ul><ul><li>No negotiation with creditors </li></ul></ul><ul><ul><li>Cheaper than chapter 11 </li></ul></ul><ul><ul><li>If you have substantial equity in your home, this is the way to file bankruptcy and save your home </li></ul></ul><ul><li>Cons </li></ul><ul><ul><li>Does not immediately eliminate debts (usually five year repayment period) </li></ul></ul><ul><ul><li>Standardized repayment plan (less flexibility than chapter 11) </li></ul></ul><ul><ul><li>Like chapter 7, does not eliminate liens or personal guarantees </li></ul></ul>
  5. 6. Individual or Business? Business Individual Means Test (Average 6 Month Income) Pass Fail Chapter 7 Debt Limits Secured: $1,010,650 Unsecured: $336,900 Over Under Chapter 11 Chapter 13
  6. 7. Reno Fernandez

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