What Is Chapter 7 Bankruptcy?
The response to this question lies in a broader question: “What are the ultimate objectives of filing for Bankruptcy?” If filing for Bankruptcy is a chance for a debtor to come out of a financial crisis and begin anew, then Chapter 7 of the Bankruptcy Code constitutes the way to accomplish this goal faster. Under Chapter 7 of the Bankruptcy Code all non-exempt material possessions of the debtor is sold and the proceeds of the same are distributed to the creditors. In most cases wherever Chapter 7 is brought into effect the debtor has no assets to lose, thus the clean slate happens relatively faster.
How Can I Be Sure Chapter 7 Bankruptcy Is The Best Solution?
Also known as liquidation (changing assets into money) or a straight Bankruptcy, Chapter 7 Bankruptcy is the most common class of Bankruptcy filing. This type of Bankruptcy filing accounts for as much as 65% of all Consumer Bankruptcy filings. As mentioned before, this is among the faster ways of beginning anew, and more so if there are no objections from any of the parties involved with the filing. Ordinarily, most (if not all) debts would be discharged within months of the lawyer filing a Bankruptcy petition.
How Does Chapter 7 Bankruptcy Work?
A trustee is appointed who gathers up all non-exempt property, sells the assets and dispenses proceeds from this sale to the proper creditors. Chapter 7 is different from other Bankruptcy filings because the debtor needs not make a “payment” to the trustee. Instead, the debtor that is in control of a asset of value will sign title over to the trustee. The debtor will then receive a payment that is to be no more then the specified exemption amount. The left over funds from the sale of the asset are distributed pro rata to creditors based on the total amount owed. This payment of the asset is in one lump sum rather then a regular payment to the trustee over 3-5 years (like in Chapter 13 Bankruptcy.) Even though in a few cases this would mean that you’ll lose all your assets, this need not always be the case. It’s strongly suggested that if you’re anxious and feel you’ll lose your assets, discuss the subject with your Bankruptcy Attorney. Under Chapter 7 Bankruptcy, the debtor receives a discharge on all dischargeable debts. There are 19 broad divisions of debt that are discharged under Chapter 7 Bankruptcy. An added advantage with Chapter 7 Bankruptcy is that by signing a reaffirmation agreement a debtor can keep paying for a car loan or a mortgage on their house. This agreement is in place because as per the United States Bankruptcy Code a debtor may be admitted to keep some or all of their property.
Who Can File For A Chapter 7 Bankruptcy?
The opposite of this question would constitute a more appropriate answer. Debtors engaged in business would generally not like the prospects of liquidation and Chapter 11 could be a better choice for such persons affiliated with corporations and partnerships. Also, persons with regular income if in a debt situation would be better suited to file a Chapter 13 Bankruptcy. In addition, any individual who has received a Chapter 7 discharge is not eligible for another Chapter 7 bankruptcy relief for 8 years.
How Do I File For A Chapter 7 Bankruptcy?
Once you begin filing for Bankruptcy you’ll know exactly what we mean by restating that our attorneys know best! Filing for Bankruptcy embodies the fulfilment of a intelligibly laid set of rules and procedures, but it is as difficult as it seems simple. You need to be certain about just one thing: “Do you need to file for Bankruptcy?” Once you have 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.
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