How Does Chapter 7 Bankruptcy Work?
How it works: In this bankruptcy a trustee is appointed by the court and he collects all the non-exempted property and sells all the assets and distributes the proceedings from this sale to the appropriate creditors. Chapter 7 is different from other bankruptcy as because in this bankruptcy the debtor does not need to pay to the trustee.
Though in some cases it would mean that you will lose all your assets, but this is not the case. If you are feeling that you may lose all your assets then it is highly recommended that you consult with your bankruptcy attorney about this matter.
In this chapter 7 bankruptcy, the debtor gets a discharge on all the dischargeable debts. 19 general classes of debts are there like child support, most taxes and student loans etc. These are some of debts which are discharged under chapter 7 bankruptcy.
One advantage is there in chapter 7 bankruptcy which is by signing in a reaffirmation agreement a debtor can continue making payments on his/her car loan or mortgage loan on his/her home. The debtor is getting the benefit as because in the US government bankruptcy code it is allowed that a debtor may retain some or all of his property.
Who Can File For A Chapter 7 Bankruptcy?
It will be easier to answer that who can not file for a chapter 7 bankruptcy. Generally debtors who are engaged in business will not like the prospect of liquidation and chapter 7 is better option for those types of individuals who are associated with some corporations and partnerships. If any individuals with regular income falls in a debt situation then chapter 13 bankruptcy will be better option for them to file.
Also if any person has been approved for a chapter 7 bankruptcy or completed a chapter 13 bankruptcy plan within last 8 years, he/she can not go for chapter 7 bankruptcy plan.
June 19th, 2009 at 7:45 am
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