Chapter 7 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 do it a bit quicker. Under Chapter 7 of the Bankruptcy Code all property that is considered to be non-exempt is sold and the proceeds are distributed to the creditors. In most cases where Chapter 7 is brought into play there are no assets to lose so it really is quicker.

This method is also called liquidation because you will turn your assets into cash. Chapter 7 Bankruptcy is the most common form of bankruptcy filing and makes up about 65% of all bankruptcy filings.

Like I said it is one of the faster ways; especially if you don’t have to get other asset owners involved. Chapter 7 lets you get rid of your debts in months of the attorney filing a bankruptcy petition as opposed to years that go with filing for Chapter 13.

This type of bankruptcy works by getting a trustee to collect all of your non-exempt property, sell the assets and distributes proceeds from this sale to appropriate creditors on your behalf and you don’t have to pay them to do it. Most of the time this means that you will lose all your assets, so it is best to think before you do it.

Under Chapter 7 Bankruptcy, the debtor receives a discharge on all dischargeable debts. Some of these debts are: child support, 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 you can continue to pay for a car loan or a mortgage. 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.

This is best people for this type of bankruptcy plan are those that do not have a steady income coming in. To file you have to get a lawyer to represent you to the court and simply do as they advise you to. Be sure the information you provide is complete and correct.

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