Chapter 7 bankruptcy is the most common and simplest form of bankruptcy. It allows the debtor to repay all of his discharged debts. Once the discharge is complete, he may switch over to a Chapter 13 bankruptcy to pay off the rest. This is a good option for many people. It helps the debtor recover from overwhelming debt quickly. Read this first!
Chapter 7 bankruptcy is a type of bankruptcy that involves liquidation of assets. This method is used to eliminate debts that you cannot pay. The bankruptcy trustee will sell non-exempt assets, including your home, car, and other possessions. The proceeds from the sale will be applied toward your debt. In some states, you may be allowed to keep secured assets. Generally, Chapter 7 bankruptcy discharges debts, but your debtors may object to the discharge of those debts.
The process of filing for Chapter 7 bankruptcy starts with filing a petition. This document will contain schedules detailing your assets and liabilities. It will also detail any unpaid debts and your income. During this process, your creditors are not allowed to garnish your wages or evict you. You can also keep your home and vehicle, but your personal belongings may not be included.
In a Chapter 7 bankruptcy, you will not get any of the money you owe. Instead, you will have to deal with your creditors in a process of negotiation that may result in a lower amount owed to you. You can also work with a nonprofit credit counseling agency to come up with a repayment plan.
Chapter 7 bankruptcy will eliminate most of your unsecured debt, including credit card debt and medical bills. However, some types of debt are not covered under this form of bankruptcy. You should also be aware that this type of bankruptcy will mark your credit report for 10 years. Because of this, getting credit will be difficult for a while after you file. If you file for bankruptcy in a timely manner, your credit score will likely recover in a few months.
Once a debtor files for Chapter 7 bankruptcy, the bankruptcy court takes jurisdiction over all of the debtor’s nonexempt property. This property can be sold by the court to repay the debt. The court will not take a debtor’s exempt property unless the debt is a secured debt. A secured debt gives a creditor the right to repossess the debtor’s property if the debtor doesn’t repay the debt. Once the debtor files for bankruptcy, he has three options: to reaffirm a debt, to surrender his property, or to redeem a debt. The latter option gives the debtor the opportunity to keep his property and avoid a foreclosure.
However, it is important to note that in order for a debtor to repay all of his debts through bankruptcy, he must repay some types of debts that are not discharged. For example, back child support or alimony obligations, as well as most student loans, will not be discharged in a Chapter 7 bankruptcy case. In addition, bankruptcy cannot eliminate debts that were incurred through fraud, embezzlement, or larceny.
It can be advantageous to switch to Chapter 13 after filing for Chapter 7. It is possible to discharge more debt in Chapter 13 than in Chapter 7. However, the process to convert from Chapter 7 to Chapter 13 is more complex than you might think. Before you convert, you must understand all the requirements and exemptions that apply to Chapter 13 bankruptcy.
A person in Chapter 13 must obtain approval from the court to incur new debt. This is to ensure that they will be able to make the payments that are required under the plan.
When you file for chapter 7 bankruptcy, you can eliminate your debts, but there are specific circumstances that make this option less desirable for some people. One of these is that you can’t get a mortgage immediately after filing. Usually, you’ll need to wait two or more years before getting a mortgage again. If you can’t afford to wait that long, consider debt consolidation instead. Also, remember that you can sue your creditors if you think they’re being unfair or abusive.
