Getting started on understanding bankruptcy definition is critical for businesses in Los Angeles, given the state’s diverse network of corporate regulators and complex laws. As such, consulting a competent attorney is the best way to go. Bankruptcy is defined as an individual or business filing for either Chapter 7 or Chapter 11 bankruptcy protection. Both types of bankruptcy are intended to provide debtors with financial relief, but they each have unique implications and benefits.

When examining the process of filing for bankruptcy protection, it is important to understand the legal elements involved and the differences between a Chapter 7 and Chapter 11 bankruptcy. In this article, we’ll provide a comprehensive overview of these elements and help you get started understanding bankruptcy definition, so you can make an educated decision about which type of bankruptcy protection is right for your business.

Chapter 7 Bankruptcy Overview

Chapter 7 bankruptcy is the most common type of bankruptcy filing that is sought by businesses and individuals in Los Angeles. The primary purpose of a Chapter 7 filing is to discharge a debtor’s debts, meaning that they are no longer legally required to repay them. This is generally the best option for debtors who have few assets, minimal income, and an inability to repay their creditors.

Under Chapter 7 bankruptcy, a bankruptcy trustee is appointed by the court to manage the debtor’s assets in order to pay off creditors. To qualify for Chapter 7 bankruptcy protection, the debtor must pass the means test. This test calculates the debtor’s income and debt levels to determine if they are eligible for a Chapter 7 filing.

Chapter 11 Bankruptcy Overview

Chapter 11 bankruptcy is another form of bankruptcy protection available in Los Angeles. Unlike Chapter 7 bankruptcy protection, Chapter 11 involves the reorganization of a debtor’s indebtedness and assets. This type of bankruptcy filing is typically used by businesses that need to restructure their debts and, in some cases, negotiate more favorable repayment terms with their creditors.

A Chapter 11 filing is generally used by businesses with more assets and higher incomes, as it allows them to retain possession of their assets while reorganizing their debt. It also allows a business to continue operating while under the protection of the court, which is an important factor for businesses that are looking to preserve their value and remain financially viable.

Options for Finding Bankruptcy Help in Los Angeles

Businesses in Los Angeles have a variety of options when it comes to finding bankruptcy help. One option is to hire a local Los Angeles attorney with experience in bankruptcy law. This option can be expensive, however, so many businesses turn to the internet for their legal needs. There are numerous online services, such as UpCounsel, that allow businesses to access experienced lawyers on demand without having to pay an expensive retainer fee.

Businesses in Los Angeles can also find legal assistance from the U.S. Trustee Program, which serves as the federal bankruptcy administrator in the region. The program provides information and resources to businesses looking to file for bankruptcy protection. Finally, businesses can turn to their local Small Business Development Center (SBDC) for information and assistance in filing for bankruptcy.


Getting started on bankruptcy definition is an important process for businesses in Los Angeles. It is important for business owners to understand the differences between a Chapter 7 and Chapter 11 bankruptcy filing and the implications of each. At the same time, they must also consider their options when it comes to finding legal help, from hiring a local attorney to utilizing online services and taking advantage of the resources provided by the U.S. Trustee Program and the Small Business Development Center.


Bankruptcy Definition,

Chapter 7 Bankruptcy,

Chapter 11 Bankruptcy