Dec
11
We have all heard of chapter 7 bankruptcy, although many of us if asked probably could not give a precise answer to what exactly it entails. Every day people make mistakes when filing for bankruptcy that probably could have been avoided if they had better understood the different types of bankruptcy.
Certainly no one wants to become involved in bankruptcy proceedings. Anyone who does will have to have debts that greatly exceed his or her net worth and, in addition, have no visible or viable means of paying back the debts.
There are a number of different forms of bankruptcy such as chapter 11 bankruptcy and the more common chapter 7 bankruptcy. Since chapter 7 bankruptcy is more common for individuals, it is the one we will focus on here.
Chapter 7 bankruptcy explained
When somebody goes through the process of chapter 7 bankruptcy, according to United States of America law they are essentially liquidating all assets (that are not legally exempt from liquidation) so they can pay back their creditors.
If you are a corporation, business and or partnership you will also be able to apply for this chapter like an individual. Chapter 7 bankruptcy is however different for individuals in that they have open to them a special extra clause in the bankruptcy filing framework.
That special clause is known as a “discharge.” What a discharge refers to is the freeing of the individual from certain debts.
How to get started filing chapter 7 bankruptcy
Generally speaking to file a chapter 7 bankruptcy one mast supply the courts with copies of their tax returns, contracts of an executive nature, statements of financial affairs, all proof of liabilities and assets as well as documents to prove one’s current income and necessary expenses.
For the public there are a series of additional items that are necessary. They will include but are not necessarily limited to the following: copies of your reports for credit counseling as well as any payment plan programs, statements of income/employee payments and in the case of being a student, copies of documents stating interest payments on one’s student loans.
The information in this document is very brief and general, if you need to find out more about chapter 7 bankruptcy and others, a good place to start would be with the links in this article and also with the US courts website. If you do file for bankruptcy make sure you get a good lawyer.
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