Filing under Chapter 7 bankruptcy laws has perhaps one major advantage, and one major disadvantage.
Many people feel that the chapter 7 bankruptcy laws, with it’s consequent legal writing off of liability for debts accrued, thus allowing individuals to restart their financial life with a clean slate, is the preferred type of bankruptcy. This is despite the fact that virtually all personal possessions have to be sold to pay off debtors as far as possible, as opposed to a chapter 13 filing that does not require the sale of personal assets, instead requiring that all debts are repaid.
A Chapter 7 bankruptcy stays on one’s credit record for ten years, as opposed to Chapter 13’s seven.
An “order of relief” and “automatic stay” is issued by the court when a chapter 7 case is filed, this does not apply to chapter 13 filings.
“Automatic stay” and an “order of relief” provide the individual with protection from their creditors as they are then no longer legally allowed to pursue the individual for any payment.
Outstanding student loans and government tax are just two examples of debts that cannot be written off under any trype of bankruptcy, and have to be repaid regardless.
In this case a Chapter 13 filing may be more appropriate, one difference is that Chapter 13 works out a repayment schedule.
These are the steps to a chapter 7 bankruptcy application:
1. List all details of your property and values. Note down your income details, payment frequency and amount. List your creditors and the amounts owed.
2. Complete required bankruptcy forms and file them at your nearest Federal court.
3. “Automatic Stay” is triggered, preventing creditors from approaching the individual for payment by any method.
4. Afrer approximately 30 days, an individual will be required to attend a “Meeting of Creditors”. It is at this meeting that it is confirmed, after examination under oath, that they cannot repay their debts, and if confirmed, discharge will be approved.
5. This is where a Trustee is appointed to oversee the liquidation of the individal’s non exempt assets, which are duly sold.
6. It takes approximately 30 days for the discharge notice to be served after the Meeting of Creditors.
7. Once the discharge notice is served, no further action may be taken by creditors to recover any debt, and any liability on behalf of the individual is removed.
Nearly all cases result in a discharge for the individual concerned.
Grounds for denying a discharge under chapter 7 bankruptcy laws are:
1 Failure to produce proper financial records
2. The individual did not account for all personal assets.
3. The individual committed a bankruptcy crime.
4. The individual broke a bankruptcy court order
5. The individual concealed, destroyed or transferred any property that belonged to their estate.
After notice of discharge has been issued, if it is discovered that property had been hidden, transferred or destroyed, the notice of discharge will be revoked.
Finally, in some cases, certain property, although pledged, for example a cherished classic automobile, may keep the property if the debt is “reaffirmed”.
“Reaffirmation” allows an individual to keep an item, providing repayments are kept up. It takes the form of a written agreement between debtor and creditor and is filed with the bankruptcy court.
The two main alternatives to chapter 7 bankruptcy are chapter 13 and to a lesser extent, chapter 11.
Chapter 11 is mainly for businesses and chapter 13 does not include the sale of personal property.
Indeed, you may be forced into Chapter 13 if it is found that you have the financial means to effect a workable Chapter 13 financial repayment plan.
Should you require more free inShould you requiremation on chapter 7 bankruptcy laws and other areas of bankruptcy, including restoring your creditworthiness after bankruptcy, go to www.howtoclaimbankruptcy.net. Click here to get your own unique version of this article with free reprint rights.
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- Guide To Complete Chapter 7 Bankruptcy Laws
- Is It Is Likely To Request A Chapter 7 Bankruptcy After The New Laws Were Put In Place
- Chapter 13 Bankruptcy
- Chapter 7 Bankruptcy
- What is Chapter 9 Bankruptcy?
- Is Chapter 13 Or Chapter 7 The Best Bankruptcy Option?
- How To File Chapter 7 Bankruptcy – Understanding The Process
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