When someone has high debt and no other feasible financial mode of repayment, they may need a fresh start in form of a bankruptcy. People file for Chapter 7 bankruptcy more often than any other type of bankruptcy, and it accounts for almost 65% of all consumer bankruptcy filings.
A Chapter 7 bankruptcy is often also preferred to a liquidation or a straight bankruptcy. The process of liquidation transfers one's possessions to funds. This course of action necessitates the appointment of a trustee. The court assigns a trustee who accumulates all non-exempt material goods, put them up for sale and the money he so collects is distributed among the appropriate creditors. On the other hand, contrasting to other bankruptcy filings, a debtor is not required to make any payments to the trustee.
Debtors many now wonder if they will lose all of their assets. The answer cannot be put in a simple yes or no, it all depends on their particular situation and the way the debt is associated with their possessions. The debtor may need to discuss their particular case with a bankruptcy attorney, since every state has a different list of exemptions (property which is the debtors to keep).
Once someone files for bankruptcy, it instantaneously establishes an “automatic stay” that prevents any creditors from getting in touch with the debtor to accrue a debt. This “stay” temporarily stops creditors from taking away the person's wages, purging their bank account or repossessing their home, vehicles, or other property, or cutting off their utilities.
Chapter 7 is the best option for people who do not declare child support or alimony, don’t have student loans to repay, don't have fines and penalties imposed for violating the law, do not have recent income tax debt, and have an income below the state median.
The Chapter 7 procedure is comparatively brief, lasting in the region of 3.5 months from filing to discharge. There are typically no motions filed by anyone in a chapter 7 case. All the same, the course of action is intricate and there are numerous stumbling blocks for the unsuspecting, and it would be prudent to hire an experienced attorney.
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