After filing a chapter 7 bankruptcy due to an overwhelming debt you are incapable of paying you can start afresh. The chapter 7 bankruptcy law was thought for individuals, partnerships and some corporations, although here we are mostly concerned with individuals.
A chapter 7 bankruptcy is also called straight bankruptcy or liquidation bankruptcy, which means that you liquidate assets in order to pay off your debts. Its purpose is to discharge specific types of eligible debts. After a legal court discharges a debt, the debtor is no longer responsible for the liability and he or she can have a fresh start.
When filing chapter 7 bankruptcy, debtors should be aware that they cannot list every single debt. According to the chapter 7 bankruptcy laws, some types of debt like child support or alimony are not eligible. However, for many people that do not have such exempted debts, the chapter 7 bankruptcy allows them a fresh start.
Should you file chapter 7 bankruptcy?
As any other involuntary or voluntary bankruptcy, filing chapter 7 bankruptcy is a serious matter that should be handled by a bankruptcy attorney or specialized bankruptcy services. From the legal point of view, the chapter 7 bankruptcy laws are not particularly complicated, but nonetheless, to file chapter 7 bankruptcy properly you must follow certain proceedings and specific chapter 7 bankruptcy laws that are different in individual states.
Generally, the type of debts individuals include when they file chapter 7 bankruptcy are clear-cut debts like a mortgage, credit card debt, tax debt, and the like. This is why the chapter 7 bankruptcy law that applies to them is not very complex, although it stands to reason that this does not apply to every single individual debtor.
However simple it may appear to you, the debtor, you have to file the right bankruptcy forms in the proper manner, and follow exactly the chapter 7 bankruptcy laws and deadlines.
For instance, your bankruptcy lawyer knows that he or she has to submit a petition to the bankruptcy court formally requesting the chapter 7 bankruptcy along with certain financial schedules that specify your expenses and your income. In addition, the court also wants a copy of the tax returns covering a certain number of years.
Chapter 7 bankruptcy information
When filing a chapter 7 bankruptcy, one of the requirements is that you attend a credit counseling course. In this Internet era, debtors are often allowed to complete this course online, which simplifies things for them.
Keep in mind that there are some legal fees associated with the chapter 7 bankruptcy. However, if you cannot afford them, your bankruptcy attorney is entitled to ask the bankruptcy court to allow you to pay those fees in affordable installments.
Essentials of the chapter 7 bankruptcy law
According to the chapter 7 bankruptcy laws there are some types of assets that are considered exempt property. Actually, each state can determine what an exempt property is. Your attorney’s job is to select the most convenient definitions so that you get the maximum relief. This is another reason to work together with a qualified bankruptcy lawyer.
After filing chapter 7 bankruptcy you will see that the debt collection calls and efforts cease very fast. This is a legal concept called automatic stay. It puts an end to phone calls, garnishments, lawsuits, levies, etc.
For this very reason, it is crucial that you take good care to compile an exhaustive list of all your creditors, and include all of them in your financial schedule. If it happens that you are not completely sure that you have a certain debt, include it all the same to prevent the stress of any collection calls and efforts in the future.
Under chapter 7 bankruptcy law, the bankruptcy court appoints a trustee to manage your liquidation case. This trustee will organize a meeting with all the creditors, where your debtors will be able to argue why they think the debt you owe to them should not be discharged. In this creditors’ meeting the trustee may ask the debtor, questions related to the debts and anything the debtor has listed on the financial statements you submitted.
Filing chapter 7 bankruptcy is the most common way for individuals overwhelmed by debt to start a new financial life free from the burden of unmanageable debts. As we said above, filing chapter 7 bankruptcy is a serious matter that a debtor should only take after careful pondering and consultation with a qualified bankruptcy attorney.
A specialized lawyer will recommend what is best for you, filing chapter 7 bankruptcy or perhaps chapter 13 bankruptcy.