How I wish I had a magic wand, with which I could wish away all my debt and be totally debt free. This is sometimes the thought many debtors and individuals who are in debt always have running through their minds, but mere wishing alone will not eliminates the debt, however, there is some federal law which you can take advantage on and get your more desire freedom from indebtedness. In this article, I will be unmasking the big masquerade commonly referred to as the chapter 7.
Liquidation under the chapter 7 bankruptcy filing happens to be the most common type of bankruptcy or insolvency filed in the united state courts. It involves the appointment of a trustee or administrator who collects the non-exempt property or properties of a debtor (individual or organization who can no longer meet their financial obligations to their creditors) sell such property or properties and distributes the proceed among the identified creditors. Chapter 7 bankruptcy cases are often referred to as “no asset” cases meaning that the debtor has no non-exempt asset any longer to fund the creditors or lenders. In the US, chapter 7 bankruptcy is usually discharged after 10 years of filing.
In 2005, the passage of Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) marked a turning point in the bankruptcy law; this made it more stringent to file for bankruptcy under the chapter 7.
Some debt cannot be wiped out by filing for bankruptcy under chapter 7, such loans/debt includes Recent taxes, Court judgments, Alimony, Student loans and Child support. Other debt/ loan such as medical bills, credit card debt and personal loans can be successfully eliminated under the chapter 7 bankruptcy act.
Consider the following before deciding to file for bankruptcy under chapter 7:
• If you do not have any or much assets
• If you have an unbearable debt burden totaling more than your annual income
• Your problem debts can be discharged, or forgiven, by Chapter 7 if such debt includes medical bills, credit card debt and personal or payday loans.
PROCEDURE FOR FILING BANKRUPTCY UNDER CHAPTER 7
The typical workflow and procedure for filing for bankruptcy under chapter 7 includes:
• Approach qualified credit counseling and undergoes an assessment and counseling session.
• Find your preferred Attorney who is versed in bankruptcy laws.
• With the advice of your attorney, gather necessary document and file the necessary papers.
• Upon submission of your petition, the trustee takes charge of the remaining process
• The appointed trustee organizes and holds a stakeholder meeting i.e. meetings between you, your attorney and identified creditors.
• After review of the submitted document, your eligibility for bankruptcy or not is confirmed by the trustee.
• The trustee determines the worth of non-exempt assets.
• Property held as collateral is then transferred to the creditors in other to resolved secured debts
• It is mandatory for the person filing for bankruptcy under chapter 7 to undergo a counseling for which they have bear the cost.
• Discharge under the chapter 7 bankruptcy usually comes 3-6 month after filing for bankruptcy if eligible which then means your eligible debt are forgiven.
In a nut shell the aforementioned are the steps to be taken to file for bankruptcy under chapter 7. A good debt management expert or advisor will be of immense benefit in making your final decision, always consult one.