Understanding Chapter 7 Bankruptcy

Declaring bankruptcy is not as simple as you may think, because before you get to this resolution, you have to make sure that you have done anything and everything in the most legal way possible to settle all your dues or to have all your financial obligations discharged. Bankruptcy should be your last resort since it may or may not cause you to lose a number of assets or properties that you have acquired. But what if you have limited assets or you do not have any properties to liquidate in the first place? How are you supposed to file for bankruptcy then? The most appropriate thing to do is to consult a lawyer with regard to the type of bankruptcy that you are eligible to file.

Luckily, for someone who is quite determined to get rid of all his debts but doesn’t possess enough properties to really use as payment, your bankruptcy lawyer is here to let you know that the best form that you will have to declare is a Chapter 7 bankruptcy. Generally, this type of bankruptcy deals with individuals who are really broke, which means that settling all your debts would be close to impossible. Most lawyers refer to Chapter 7 as straight or liquidation bankruptcy because of its straightforward approach on the concern. Through this type you will directly turn over all your assets under the non-exempt category to a court appointed trustee to handle the liquidation of whatever eligible property you have. The money that will be collected from the sale of your assets will be divided and distributed to your creditors as payment for your loans. Chapter 7 bankruptcies also cater to those who really do not have any property to liquidate – if you are really scarce on resources, you can just declare that you are bankrupt, straight up.

There are quite a number of reasons why you or other people file for a Chapter 7 type of bankruptcy: the most common factor would be unemployment. Since the economy has not really picked up the way the government would want it to be, a lot of businesses and establishments have closed out, thus making a large number of people lose their jobs. And because of unemployment, you may not have enough money saved up to cover for all your family’s daily expenses and at the same time pay for your monthly bills and existing loans.  Another reason would be you or someone in your family gets really sick and the expenses amounted to a figure so large that you can’t seem to find a way to pay for everything. You may also be going through a rough divorce which costs a lot of money and may cause you to lose all your properties. Another possible way that you could go bankrupt and file for a Chapter 7 is if you failed to keep track of your expenses and credit card activities. Remember that excessive spending and allowing your bills to sky rocket can really impale you and your finances.

As soon as you and your lawyer determine that you should file for a Chapter 7 bankruptcy, you also have to start familiarizing yourself with its process. The first thing to do to file for this type of financial situation is to let your lawyer file for a petition in court. Your petition should present all the pertinent information regarding your finances which include a complete list of your creditors and all your properties and account statements. You should also include your existing letters from your loan providers and credit card companies as well as your current and past due bills. Remember that it is really important to provide the court with accurate information, because lying or leaving certain information out can get your case trashed or ignored and in the end you will not be relieved from all your debts. You will be given a maximum of 6 months to complete and submit all your documents if you want to push through with the bankruptcy case. Now with regard to the process of selecting your assets set to be liquidated, the court will usually take a look at all your assets and assess whether they belong to the exempt or the non exempt categories. What the court will accept for liquidation would be the non exempted assets so your primary or main home, the vehicle that you use on a regular basis and of course all your articles of clothing are safe from being sold. Now your secondary vehicles, jewelries and other family possessions that you do not necessarily need, will be up for selling from which the sales will be used to pay for all your debts.

Filing for a Chapter 7 can be very advantageous to you because not only will your debts be totally wiped out and of course, you will be completely free from all those annoying and harassing telephone calls and visits from your creditors and credit card collectors. Another thing, your existing job will not be affected by this claim for bankruptcy, so you should not worry too much about losing your job or being extorted for payments. Your loan providers will have no other choice but to accept the payment that you will be submitting, no matter how small the amounts are. This is because the court will determine all your non exempt properties and the sale of these assets will be their only source of payments. The court will appoint the trustee who will be placed in charge of liquidating your properties, so this means that you will not have to pay a single penny for his or her services. And most importantly, you will be safe from having law suits filed against you. Because when you file for a Chapter 7 form of bankruptcy, your creditors will just have to face the fact and acknowledge that you are incapable of settling all your dues and cannot demand any form of payment from you. The most that they can do is just to wait for your properties to be sold and for the appointed trustee to post your payments.