If you're drowning in a sea of debt, chapter 7 bankruptcy may be your way to relief! This process is also known as "liquidation" or "straight bankruptcy" and it provides you will a fresh financial start within a matter of months. If you're looking for financial freedom from debt in your personal life or your business, consult a lawyer about this option today!
Eligibility Requirements
Single individuals, married couples as well as corporations and partnership businesses may be eligible for this type of financial relief. Income and expenses are also examined to be sure that you are eligible.
Those who wish to file chapter 7 bankruptcy are required to obtain credit counseling as well as budget analysis. This helps to clarify your situation. Most candidates hire an attorney who specializes in this field to help them obtain the information they need.
Steps to File
Your lawyer will help you prepare an official petition, a schedule and an official statement of your financial affairs, all of which will be presented to the court. This information includes several items, including:
- A list of your current creditors, including their claim types and the amount you owe
- Your income source, the amount earned, and the frequency of income
- A list of all the property you currently own
- Your budgeted list of monthly living expenses
One of the benefits to filing for chapter 7 bankruptcy is the order, which forces your creditors to stop contacting you for payments. This is called an "automatic stay," and it protects you from pressuring calls from those to whom you owe money as well as potential lawsuits, which your creditors may have been planning to file against you.
A Trustee is appointed
As part of the process, a trustee is appointed to be the administrator in your case. He'll take care of most of the issues outside the courtroom. The trustee has access to all your property except for those things, which have been exempt. Exempt property may include:
- Your current home or other real estate
- Professional tools or books used in your trade
- Life insurance contracts which have not yet matured
- Medical prescriptions or necessary health aids
- Benefits including Social Security, veteran's benefits, disability, illness or unemployment
- Funds, which were awarded to you during a lawsuit
Your trustee will take charge of any property that isn't exempt and he begins to work through your case. Sometime within the next 40 days, your trustee will call a meeting with the creditors. You will be there to answer any questions they may have about your current property and the debts you owe.
Reaffirming Debts or Purchasing Property
You can choose to negotiate with the creditor and continue making payments. Within 45 days after the meeting you need to let them know if you'd like to continue making payments or pay off the loan balance. This is not usual an option open to chapter 7 bankruptcy filers since they don't have large amounts of money.
If you do decide to reaffirm a debt, the court must evaluate your income and expenses so they are assured that you can continue making payments.
Discharge from the Debt
A typical filer's goal is to be cleared of the debt without having to pay it. Once you are discharged, your debts are cleared, and you're allowed to begin again with a clean financial slate.
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