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What is Chapter 7
Bankruptcy ?
Chapter 7 bankruptcy, the inability
to pay debts as they come due, and the
discharge of debt for individuals.
Chapter 7 bankruptcy in particular
liquidates and divvies up the assets of the
person who cant pay their bills. Those
assets are then redistributed amongst the
creditors in as fair a manner as possible.
Corporations and partnerships may liquidate
their assets in bankruptcy, but they may not
discharge their debts.
How Do I File For Chapter 7?
Chapter 7 is voluntary and filed by
the debtor. A fee of around $200 is required
at the time of filing and may be paid in
installments. Married couples may petition
together. These are the forms necessary to
fill out and file:
The petition
Statement of financial affairs
Schedule of assets and liabilities
Schedule of current income and current
expenditures (consumer debtors)
Immediately upon filing, an order of relief
automatically results.
Can I Be Forced Into Chapter 7?
It is possible for Chapter 7
bankruptcy proceedings to begin on your
behalf without your consent, but this
requires a petition by three creditors. When
this happens, a stay results against you and
everything you own which means that no
further forms of action may be taken against
you.
Whats Next?
After the stays against your property have
been placed, a number of things will happen
to get your affairs in order and fairly
compensate your creditors.
An interim trustee is appointed to you.
Your creditors are notified of your
bankruptcy status.
A month after filing, your creditors hold
their first meeting to ensure that you have
honestly and fully disclosed all of your
assets through your interim trustee.
Your trustee liquidates your property.
Your assets are distributed amongst your
creditors.
A discharge hearing declares which debts
have been dissolved and which are still in
place as well as how those remaining debts
will be paid and when.
After the hearing, you must make payments
according to the schedule you agreed upon at
the hearing but other than that, you are
free to rebuild your life and your credit as
you see fit!
Will I Lose Everything I Own?
Not everything. Individual debtors have the
right to claim some of their household
property as exempt from collection and
liquidation. Certain items with strict
regulations are stipulated by federal and
state departments as allowed to be claimed
as exempt. However, 75% of the United States
have legislation opting out of federal
exemptions, requiring debtors to choose from
the state allowed exemption possibilities
only.
How Long Will The Bankruptcy Process Take?
It depends. In simple cases where there are
no pre-bankruptcy issues and no need for the
trustee to go through the process of
tracking down and claiming large amounts of
property, it could be just a few months. But
it could take years.
No matter what, you will be considered
discharged of debt during the process and an
injunction against any creditors attempting
to secure what you owe is put into place.
You may not be prosecuted for the debt and
it is illegal for you to be fired or
discriminated against at work because of
your Chapter 7 bankruptcy.
Am I Guaranteed That My Debts Will Be
Discharged?
No. It is rare, but you may possibly be
denied the right to bankruptcy based on
misbehavior before the bankruptcy, including
bad behavior after filing. Some things that
will keep you from bankruptcy include:
Fraud
Concealment of property
Failure to obey lawful court orders after
filing
Failure to respond to material questions
about your case
Previous bankruptcy within the six years
previous
Some debts are exempt from being discharged
even though you may have many others taken
care of through Chapter 7. Some of
the debts that may be exempt from discharge
include:
Debts obtained through false financial
statements
Credit card usage
Alimony or child support
Drunk driving fines
Willful injury to property or person
Student loans
Recent tax obligations
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