Chapter 7 Bankruptcy - Everything You Want to Know

Chapter 7 is the most common bankruptcy that an individual or business can declare. Bankruptcy, in general, is a process by which declares that outstanding debts cannot be paid. Chapter 7, Title 11, United States Code specifically deals with the process of liquidation through bankruptcy. Liquidation, when it is due to a bankruptcy, means that a company is ended and its valuable assets are distributed to the creditors; however, some protections exist against certain types of property being seized, but this applies to individuals declaring bankruptcy as opposed to corporations (which are considered legal persons). A bankruptcy attorney, or several, would be required in a corporate bankruptcy, but an individual can also file with the aid of a bankruptcy attorney.

In the case of individuals, who can declare bankruptcy through Chapter 7 if they own a business or property, some of it may be seized to repay creditors, but in all likelihood, it is property that was purchased through credit and has not been paid for by the debtor. Chapter 7 bankruptcy stays on one's credit report for 10 years after it is filed. However, one can begin the process of rebuilding credit scores during this time.


A bankruptcy attorney can aid an individual through the process of declaring bankruptcy and ensure that it goes as painlessly as possible. A petition preparer can help with filing a bankruptcy at a lower cost than an attorney, but because they are not legally trained to the same extent as bankruptcy attorneys, they may not provide the same outcome.

Similarly, much like the tax form software has become popular in recent years, the financial crisis has brought forth the popularity of bankruptcy declaration software. Now, one can declare bankruptcy online. While this method will save the most time, it is software, and therefore can only be so thorough; whereas, a human mind has the flexibility to make connections and find possibilities that benefit the filer. Consider that even grammar and spell checking software, which has had time to become highly advanced, still makes mistakes that require a trained person to locate. The other option for people declaring bankruptcy is to simply fill out the federal bankruptcy forms themselves. Being unfamiliar with the complex forms, however, could lead to more problems than solutions.

Out of the available options, hiring a bankruptcy attorney will provide the most benefit to the individual or business no longer able to pay debts. The terms and conditions of any legal and financial situation are bound to be complex, and unless one is familiar with the terminology and possibilities, while also being experienced in determining the best possible outcome, costly mistakes may be made. An attorney who has specific experience with bankruptcy law will be able to make the best call in each situation.

Consulting with a bankruptcy attorney is the safest bet. Chapter 7 bankruptcy, whether for a business or an individual, is a big deal. A large amount of money and assets are at stake, so having a fully trained, knowledgeable lawyer at every step of the process will help you make it through the bankruptcy in the best possible condition.

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