Chapter 7 bankruptcy refers to a certain kind of bankruptcy in which a creditor seizes the possessions of a debtor and liquidates them, allowing them to collect the money in order to receive compensation for their loans. Upon the conclusion of this procedure, most of the debts that a debtor incurred is discharged, which effectively allows them to gain a hold of their finances with a fresh start. Not only do individuals typically use this form of bankruptcy, but a business may wish to do it, as well. Chapter 7 is the most often filed bankruptcy in the whole of the U.S. If you file for Chapter 7, your procedure will begin with many legal papers to file at a bankruptcy court.
You will need to show that you neither may nor are eligible to restructure your payments through a proposed plan and also offer a list of all of your nonexempt belongings. The court will evaluate your papers and determine whether or not you may go through liquidation, upon which you will need to visit a creditor meeting. The creditors will speak about the belongings that you have claimed may be liquidated, and they may consent to getting only a partial repayment of the money they lent to you. Alternatively, they're given the option to refuse canceling your debt if they feel that you accumulated your troubles due to unlawful or fraudulent activities. Additionally, there are some kinds of debts that aren't legally able to be discharged under Chapter 7, such as a student loan.
You'll have to undergo the proceedings for Chapter 7 bankruptcy for upwards of 6 months, with the process possibly becoming very involved. You may wish to hire a lawyer for this process, though you're well within your choices to file independently. Either way, you'll have some possessions ruled to be exempt, meaning that they can't be seized and sold. Furthermore, a creditor may decide that one of your nonexempt belongings is actually worthless, so they will treat it as if it were exempt. A trustee handles the selling of all of your belongings, trying to get only the best price.
If you decide to file for Chapter 7, you are required to attend credit counseling, especially since it could be difficult for you to get new credit for a few years. It is also not legally possible for you to file again for bankruptcy for at least six years since you last filed. A credit counselor is hired in order to help you reconstruct your credit and history in the midst of bankruptcy.
New laws in the United States have made it more complicated to file for Chapter 7 these days, which makes it a good idea to consult both an accountant and an attorney when you are considering filing for bankruptcy. The fees may be large, but there may be an alternative solution for you.
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If you live in Alabama, Florida, Missouri, New York or Wyoming, please click here for additional information.
By an Act of Congress and the President of the United States, we are a federal Debt Relief Agency. Attorneys and/or law firms promoted through this Web site are also federally designated Debt Relief Agencies. They help people file for relief under the U.S. Bankruptcy Code. Disclosures Required Under the U.S. Bankruptcy Code.