What Is Chapter 7 Bankruptcy?
The answer to this question lies in the answer to a broader question: “What is the ultimate aim of filing for bankruptcy?”
Chapter 7 of the Bankruptcy Code is an opportunity for a debtor to emerge out of a financial crisis and start afresh relatively quickly. Under Chapter 7 of the Bankruptcy Code all non-exempt property of the debtor is sold and the proceeds of the same are distributed to the creditors. In most cases where Chapter 7 is brought into force the debtor has no assets to lose, therefore, the fresh start takes place within a few months.
Generally, excluding cases that are dismissed or converted (to other types of Bankruptcies), individual debtors receive a discharge in more than 99 percent of chapter 7 cases. In most cases, unless a party in interest (i.e., a creditor) files a complaint objecting to the discharge or a motion to extend the time to object, the bankruptcy court will issue a discharge order relatively early in the case – generally, 60 to 90 days after the date first set for the meeting of creditors (341 Meeting – named after the section of the Bankruptcy code which is a short meeting with the Trustee).
Also known as liquidation (converting assets into money) or a straight bankruptcy, Chapter 7 Bankruptcy is the most common form of bankruptcy filing. This type of bankruptcy filing accounts for as much as 65% of all Consumer Bankruptcy filings.
As mentioned before, this is one of the faster ways of starting afresh, and more so if there are no objections from any of the parties involved. Ordinarily, most (if not all) debts would be discharged within months of the attorney filing a bankruptcy petition.
How Does Chapter 7 Bankruptcy Work?
A trustee is appointed to collect all non-exempt property, sell the assets and distribute proceeds from this sale to appropriate creditors. Chapter 7 is different from other bankruptcy filings because the debtor does not need to make a payment to the trustee.
Even though in some cases this would mean that you will lose all your assets, this is not necessarily always the case. It is strongly recommended that if you are apprehensive and feel you will lose your assets, discuss the matter with Attorney Jeremy Peck.
An added advantage with Chapter 7 bankruptcy is that by signing a reaffirmation agreement a debtor can continue to pay for a car loan or a mortgage on their home. This agreement is in place because according to the US Government Bankruptcy Code a debtor could be allowed to retain some or all of his property.
How Do I File For A Chapter 7 Bankruptcy?
While an individual may file Bankruptcy on his or her own, the Bankruptcy Code is complex, the necessary forms to be filled out are numerous, and mistakes can mean losing assets that may other wise could have been kept. One of the harder but necessary questions you have to ask is: “Do I need to file for bankruptcy?” The Law Office of Jeremy F. Peck can help you understand what that question really means.
