About Chapter 7 Bankruptcy

Bankruptcy Ch. 7 is one of the forms of bankruptcy that a private citizen or business can file with the courts. This court-supervised process allows a trustee to college all the assets of the debtor, whether private or business, liquidate those assets and make payments to creditors. The debtor has the right to keep some exempt property in a Chapter 7 bankruptcy, but this is rapidly changing. If you are considering using this process, check with current laws to learn what property may be exempt.

In some cases, bankruptcy through Ch. 7 is done on a 'no-asset' basis when the debtor owns nothing that can be liquidated. Any person or business that finds it necessary to file bankruptcy but wants to keep assets that are not covered in those that are exempt then Chapter 13 bankruptcy may be the better solution.

The purpose of bankruptcy Ch. 7 is to allow unsecured debts to be wiped away, giving the person or business another chance to build a financial future. Any creditors which hold unsecured claims against the person or business must file proof of that claim with the court. Certain unsecured debts are discharged and the debtor is no longer liable for that debt.

Bankruptcy Ch. 7 usually takes four to six months to process. Often about three months after the court makes its decision regarding the bankruptcy, the debtor will receive proof of discharge of those debts that were wiped away.

Proper money manage can help you avoid finding yourself in a bankruptcy Ch. 7 courtroom. However, there are some situations where this is simply unavoidable. If you find that you need to file bankruptcy, you should research which form of bankruptcy is best for your specific financial situation. There will be filing fees and possibly legal fees incurred when filing, but it may be the solution that you need to change your future.

Next article: What Is Chapter 11 Bankruptcy

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