How Does Chapter 7 Bankruptcy Work?

By:


Deciding to apply for personal bankruptcy may be one of the most difficult decisions you have to make. Along with that, which sort of bankruptcy you declare might have an impression on your life, your chosen lifestyle as well as your family. Chapter 7 bankruptcy is the reason for nearly two thirds of all consumer bankruptcies, but precisely what is it? The following is step-by-step description of Chapter 7 personal bankruptcy, and everything that it could change for you.

The leading concept of personal bankruptcy is basically turn your financial crisis into a better future, and in lots of ways, Chapter 7 (also referred to as straight bankruptcy) may be the fastest means of doing so. All valuable belongings are inventoried and handed over to a trustee, who is responsible for trying to sell the items, thus creating the proceeds to pay off the creditors. Together with the case alone, the person must have other records in place: a full directory of property and debts, details concerning income and expenditures, a present-day review of finances and all leases or agreements still active.

When one begins the process of bankruptcy, their property is covered by an 'automatic stay'. This helps prevent creditors from trying to obtain compensation for virtually any debts unless the action has been agreed upon by the court. The stay will last for however long your bankruptcy case. Just some great things about an automatic stay are protection from eviction, vehicle repossession and foreclosure.

Concerning your other property, you've likely heard the terms 'secured debts' and 'unsecured debts.' A 'secured' creditor is one whose lent money is insured by assets of some kind; if your debt is not settled, the collateral can be repossessed. Oftentimes, once the secured debts are settled in a Chapter 7 proceeding, the unguaranteed ones (those where there isn't any collateral and as such no risk of damage, most notably credit card bills) are cleared. In some instances, such as when the consumer doesn't have any useful assets, the time span between filing and debt settlement can be just a couple of months, and rarely does even an asset-heavy Chapter 7 take longer than 6 months.

Another consideration to remember is that many outstanding debts are not dischargeable, such as child support, past due taxes, and student loans. Other non-dischargeables may include any obligations incurred from the acquisition of a luxury item in the two months before filing for bankruptcy.

About the Author:
If you're deciding to petition for Chapter 7, you may want legal assistance. The services provided by experienced Detroit Chapter 7 lawyers can make it easier for you as you figure out your finances, and your future.



Article Originally Published On: http://www.articlesnatch.com


Tags: , , , , ,

|

Loading...
Related....
Videos...

Recent Finance Articles

Comments

Still can't find what you are looking for? Search for it!

Loading

Site Navigation:

Copyright 2005-2011 ArticleSnatch, LLC - All Rights Reserved.
Privacy Policy | Terms of Service.