Chapter Seven Bankruptcy Laws Post 2005
There are different reasons for filing under chapter 7 bankruptcy laws, with both plus and minus points.
Perhaps the major attraction of the Chapter 7 bankruptcy laws is that it allows the applicant 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.
Once a Chapter 7 bankruptcy has been filed, the individual filing then has the protection of the court by means of an “order of relief” and “automatic stay”.
This protects the individual in that any creditor may no longer contact the individual directly to seek repayment of debt, even if a foreclosure notice has been served.
It is important to bear in mind that not all debt can be legally discharged under the chapter 7 bankruptcy laws. For example, alimony payments, tax payments and liens on mortgages to name three, cannot be discharged.
If the main cause of bankruptcy is due to debt that cannot be discharged under chapter 7 bankruptcy laws, chapter 13 with it’s repayment schedule is the way forward.
Chapter 7 procedure is as follows:
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. Complete required bankruptcy forms and file them at your nearest Federal court.
3. “Automatic Stay” is triggered, preventing creditors from approaching the individual for payment by any method.
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. Under the supervision of a trustee, appointed by the court, the individuals assets are then sold to repay as much debt as possible.
6. After approximately 2 – 3 months the discharge is granted by the court and a discharge notice issued.
7. With the exception of non-exempt debt, there is no further liability for any debt on behalf of the individual after the discharge notice is granted.
Nearly all cases result in a discharge for the individual concerned.
In some cases a discharge under the chapter 7 bankruptcy laws will not be granted, this can be for the following reasons:
1. The individual did not provide accurate accounts.
2. The individual did not account for all personal assets.
3. The individual was attempting criminal bankruptcy.
4. The individual chose to ignore all or part of an order of the bankruptcy court.
5. Estate property was transferred, hidden or destroyed by the individual.
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.
The two main alternatives to chapter 7 bankruptcy are chapter 13 and to a lesser extent, chapter 11.
Chapter 13 bankruptcy provides for repayment of debt via a repayment plan and has no liquidation of assets, likewise chapter 11, which is more common amongst large corporations.
Indeed, you may be forced into Chapter 13 if it is found that you have the financial means to effect a workable Chapter 13 financial repayment plan.
If you would like more free inIf you would likemation on chapter 7 bankruptcy laws and other areas of bankruptcy, including rebuilding your creditworthiness after bankruptcy, go to www.howtoclaimbankruptcy.net. Get a totally unique version of this article from our article submission service
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