Bankruptcy Proceedings

Chapter 7 Bankruptcy

Chapter 7 bankruptcy is one of the most common forms of bankruptcy individuals file for. Chapter 7 bankruptcy allows you

to have a fresh start in some ways. It completely erases most of your debts, however not all debts can be erased. Debts

which can't be erased include back taxes from the past three years, alimony, child support and most student loans.

Under Chapter 7 bankruptcy, creditors can seize all assets that are not exempt by law, as opposed to Chapter 13

bankruptcy where most of your assets are protected from your creditors. With Chapter 7 bankruptcy, the debtor is usually

left with a car, clothing, some jewelry, basic household goods, and the equity in their primary residence (up to a certain

amount). Another downfall of Chapter 7 bankruptcy is that it stays on your credit record for 10 years, as opposed to

Chapter 13 bankruptcy, which stays on your report for 7 years.

Chapter 7 bankruptcy does help eliminate some unsecured debt.

Unsecured debts are debts that do not identify specific assets the

debtor is entitled to in case of default. Some examples of unsecured

debt that may be able to be eliminated by filing a Chapter 7

bankruptcy are credit cards, medical bills, judgments resulting from

car accidents and deficiencies on repossessed vehicles.

Chapter 7 bankruptcy differs from Chapter 13 bankruptcy again in

that with Chapter 13 bankruptcy, the debtor has to negotiate with

each creditor to pay a portion of what they owe over a three to five

year period under a schedule approved by the court. Therefore,

there are pros and cons to filing for both Chapter 13 and Chapter 7

bankruptcies.

To file for Chapter 7 bankruptcy, you will have to file a sworn list of

creditors, a schedule of assets and liabilities, a list of exempt

property, a schedule of current income and expenditures and a

statement of your financial affairs. You will also have to surrender all

property of the estate to the trustee. The court will then give notice

of the Chapter 7 bankruptcy to your creditors.

The court may then dismiss a Chapter 7 bankruptcy if the debtor unreasonably delays the proceedings to the creditors'

prejudice, fails to pay necessary fees or payments or fails to file his or her schedules.

There are many individuals and companies available to help you with filing for Chapter 7 bankruptcy. These people and

organizations can give you advice on how to avoid filing for bankruptcy (through processes such as debt consolidation) and

help you step by step if you do decide to file for Chapter 7 bankruptcy.

The best advice is to not have to file for bankruptcy. Bankruptcy stays on your credit report for years to come and even with

Chapter 7 bankruptcy, not all types of debts can be erased, so you will still be paying back creditors if you owe certain kinds

of unremovable debts. Make sure you seek legal or credit counseling before you file for any type of bankruptcy so you can

make sure that you are choosing the right options for you and your debts.

What is bankruptcy, how it all works, the different types of bankruptcy and what they mean.

Next - Chapter 13 Bankruptcy

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