What is Chapter 7 Bankruptcy
The answer to this question lies in the answer to a broader question: “What is the ultimate aim of filing for bankruptcy?”
If filing for bankruptcy is an opportunity for a debtor to emerge out of a financial crisis and start afresh, then Chapter 7 of the Bankruptcy Code is the way to achieve this end relatively faster. Under Chapter 7 of the Bankruptcy Code all non-exempt property of the debtor is sold and the proceeds of the same are distributed to the creditors. In most cases where Chapter 7 is brought into force the debtor has no assets to lose, therefore the fresh start takes place relatively faster.
How Can I Be Sure This Is The Best Way?
Also known as liquidation (converting assets into money) or a straight bankruptcy, Chapter 7 Bankruptcy is the most common form of bankruptcy filing. This type of bankruptcy filing accounts for as much as 65% of all Consumer Banking filings.
As mentioned before, this is one of the faster ways of starting afresh, and more so if there are no objections from any of the parties involved. Ordinarily, most (if not all) debts would be discharged within months of the attorney filing a bankruptcy petition.
How Does Chapter 7 Bankruptcy Work?
A trustee is appointed who collects all non-exempt property, sells the assets and distributes proceeds from this sale to appropriate creditors. Chapter 7 is different from other bankruptcy filings because the debtor needs not make a payment to the trustee.
Even though in some cases this would mean that you will lose all your assets, this need not always be the case. It is strongly recommended that if you are apprehensive and feel you will lose your assets, discuss the matter with your Bankruptcy Attorney.
Under Chapter 7 Bankruptcy, the debtor receives a discharge on all dischargeable debts. There are 19 general classes of debt, such as child support, most taxes and student loans that are discharged under Chapter 7 Bankruptcy.
An added advantage with Chapter 7 bankruptcy is that by signing a reaffirmation agreement a debtor can continue to pay for a car loan or a mortgage on their home. This agreement is in place because as per the US Government Bankruptcy Code a debtor could be allowed to retain some or all of his property.
Who Can File For A Chapter 7 Bankruptcy?
The reverse of this question would be more appropriate to answer. Debtors engaged in business would usually not like the prospects of liquidation and Chapter 11 might be a better option for such individuals associated with corporations and partnerships. Also, individuals with regular income if in a debt situation would be better suited to file a Chapter 13 bankruptcy.
Also, any person who has been granted a Chapter 7 discharge (or completed a Chapter 13 plan) within the last 6 years, cannot file for a Chapter 7 bankruptcy plan.
How Do I File For A Chapter 7 Bankruptcy?
Once you get down to filing for Bankruptcy you’ll know exactly what we mean by repeating that our attorneys know best! Filing for bankruptcy is the fulfillment of a clearly laid of set of rules and procedures, but it is as complex as it seems simple. You need to be sure about just one thing: “Do you need to file for bankruptcy?” Once you’ve filled our evaluation form and got the answer to that basic question, in discussion with our attorneys give all details of your case. Be sure the information you provide is complete and correct. Once these preliminary things are taken care of, leave it to the attorneys to take your case to its logical conclusion.