A Guide To Chapter 7 Bankruptcy

Bankruptcy is a legally declared inability of individuals orunder chapter 7, automatically stays most collection
businesses to discharge their debts. A declared stateactions against the debtor or the debtor's property, but
of bankruptcy can be requested not only by creditorspotential debtors should realize that the filing of a
in an effort to get what they are owed but also by thepetition under chapter 7 might result in the loss of
insolvent individual or organization. If it is difficult toproperty.
repay debts, declaring the bankruptcy may be the rightAfter Chapter 7 bankruptcy, one will not longer owe
solution to debt problems.money on credit cards, unsecured loans, unpaid
Out of six basic types of under the Bankruptcy Code,hospital, medical and utility bills and unpaid rent. But
Chapter 7 is a "liquidation" of nonexempt assets to paydebts like state and federal taxes (unless they are
debts. In a court-supervised procedure, a courtmore than three years old), child support required by
appoints a trustee who liquidates the non-exemptlaw; alimony, government-backed student loans, debts
assets of the debtor's estate and makes distributionsdue to fraud, fines, penalties and debts due to willful
to creditors. The Bankruptcy Code allows the debtorinjury to another person or property are not eliminated
to keep certain exempt property; but a trustee willby Chapter 7 bankruptcy.
liquidate the debtor's remaining assets.Just a few months after the petition is filed, in most
According to the amendments to the Bankruptcychapter 7 cases, the individual debtor receives a
Code enacted in to the Bankruptcy Abuse Preventiondischarge that releases debtor from personal liability
and Consumer Protection Act of 2005, if a debtor'sfor certain dischargeable debts. Thus, chapter 7
income is in excess of certain thresholds, the debtorBankruptcy is designed to give the debtor a new start
may not be eligible for chapter 7 relief. Filing a petitionand a chance to live with sound financial management.