Bankruptcy - Chapter 7
Chapter 7 bankruptcy is one type of bankruptcy that is available for people to file under the Bankruptcy Code. This form of bankruptcy is not available to everyone. Only certain people can file this type of bankruptcy and only people in certain situations should someone file this type of bankruptcy.
Who Can File Chapter 7 Bankruptcy?
Chapter 7 bankruptcy is available to individuals and some businesses. In order to file Chapter 7 assets should be limited to those that can be claimed as exempt.
In some cases, though, Chapter 7 may be best even if someone has more assets. The court, though, may rule that a person can not file a Chapter 7 if their assets are high enough to clear their debt.
Process of a Chapter 7 Bankruptcy
The process of filing a Chapter 7 bankruptcy starts with collecting all the information about your debts and your financial situation. You will be required to meet with a counselor and attend counseling that will help you to decide if filing bankruptcy is the best option.
You will then be able to start filing out the proper forms and filing them with the court. Over the next few months or so you will be required to attend court and plead your case. The court will then decide if your bankruptcy is granted or not.
The whole process can last quite some time, but during the process you are protected from debt collection by creditors.
Risks of a Chapter 7 Bankruptcy
Bankruptcy is not a simple solution when you do not want to pay your debts. In fact, recent changes in the bankruptcy laws has made filing bankruptcy more difficult and in some cases impossible.
You are at risk of losing your assets because they can be taken to repay debts. You are also going to end up with a damaged credit record. The effects of a bankruptcy can last seven to ten years and can really hurt your ability to get loans and other forms of credit in the future.
New laws may require you to file a Chapter 13 instead of a Chapter 7 if your income is deemed to be more than the set amount. The court can decide that a repayment plan is better for your situation instead of actually clearing your debts.
Bankruptcy should not be looked at as a way to get out of your financial obligations because you will end up paying in the end in some way. Additionally, not every debt can be cleared through bankruptcy. If you take the process seriously then you should end up with the result you desire.
