There are perhaps two major aspects to filing under the chapter 7 bankruptcy laws, one positive, and one negative.
Perhaps the major attraction of the Chapter 7 bankruptcy laws is that it allows the filer to restart their life debt free and with a “clean slate”. However, the downside is that Chapter 7 results in the liquidation of personal property and valuables, including the family home, as opposed to Chapter 13, where no assets have to be sold.
A Chapter 7 bankruptcy stays on one’s credit record for ten years, as opposed to Chapter 13’s seven.
An “order of relief” and “automatic stay” is issued by the court when a chapter 7 case is filed, this does not apply to chapter 13 filings.
“Automatic stay” and an “order of relief” provide the individual with protection from their creditors as they are then no longer legally allowed to persue the individual for any payment.
Outstanding student loans and government tax are just two examples of debts that cannot be written off under any trype of bankruptcy, and have to be repaid regardless.
Given that a chapter 13 bankruptcy results in a repayment plan so that all debts are subsequently repaid, this is useful if a major contributor to the bankruptcy application is debt that cannot be discharged under the chapter 7 bankruptcy laws.
These are the steps to a chapter 7 bankruptcy application:
1. The court will require income details, together with a list of personal posessions and their market value, and a list of debts and creditors.
2. The nearest Federal court is where completed bankruptcy forms should be taken.
3. The individual is then protected from their creditors by means of an “order of stay”, which prohibits any creditor from contacting the individual concerned.
4. Approximately one month later the court will notify the individual of the “341″ meeting that it is compulsory for you to attend. This gives the creditors the chance to check that you are unable to meet your debts to them, and are not merely trying to avoid payment. Once satisfied, the discharge will be approved.
5. This is where a Trustee is appointed to oversee the liquidation of the individal’s non exempt assets, which are duly sold.
6. Discharge notice is then served some 30 days later,
8. Once the discharge notice is served, no further action may be taken by creditors to recover any debt, and any liability on behalf of the individual is removed.
99% of chapter 7 cases result in a discharge.
Grounds for denying a discharge under chapter 7 bankruptcy laws are:
1. The individual did not provide accurate accounts.
2. The individual tried to hide personal assets from the court.
3. The individual was attempting criminal bankruptcy.
4. An order of the bankruptcy court was broken.
5. If any property has been removed, hidden or transferred that belonged to the individual’s estate.
In the case of 5, above, should the circumstances detailed be found out after a discharge, the discharge may be revoked.
However, it is possible to retain certain types of property, perhaps a classic car for example, under “reaffirmation”.
This simply means that a written agreement is made and filed with the court, in which the seller and debtor agree that the item may be kept as long as repayment s are maintained.
Alternatives to Chapter 7 are Chapter 11 and Chapter 13.
Chapter 11 is mainly for businesses and chapter 13 does not include the sale of personal property.
Should an individual be found to have the financial means to repay debts, chapter 13 bankruptcy may be imposed.
If you would like more information on Chapter 7 insolvency laws and other aspects of insolvency, including restoring your credit score after insolvency, visit www.howtoclaiminsolvency.net. Get a totally unique version of this article from our article submission service
