Who May File for Chapter 7 Bankruptcy Protection?
Individuals and some businesses can file for Chapter 7 bankruptcy. In order to register under Chapter 7, only exempt assets may be used as collateral.
In some instances, Chapter 7 may be preferable even if the debtor has more assets. However, the court may determine that a person cannot file for Chapter 7 bankruptcy if their assets are sufficient to pay off their debt.
The Chapter 7 Bankruptcy Procedure
The first step in filing a Chapter 7 bankruptcy is gathering information about your debts and financial situation. You will be required to meet with a counselor and attend counseling sessions that will assist you in determining whether filing for bankruptcy is the best course of action.
Then, you can begin filling out the appropriate documents and filing them with the court. In the coming months, you will be required to appear in court and argue your case. The court will then decide whether or not to grant your bankruptcy.
The entire process can take a considerable amount of time, but you are protected from creditors during that time.
Dangers of filing Chapter 7 Bankruptcy
When you are unable to pay your debts, bankruptcy is not a simple solution. In fact, recent changes to the bankruptcy laws have made it more difficult and in some cases impossible to file for bankruptcy.
You run the risk of losing your assets because creditors can seize them to satisfy debts. You will also wind up with a damaged credit history. Seven to ten years after a bankruptcy, your ability to obtain loans and other forms of credit could be severely impaired.
If your income is deemed to exceed the threshold, new laws may require you to file Chapter 13 instead of Chapter 7 bankruptcy. The court may determine that a repayment plan is preferable to the actual discharge of your debts.
Bankruptcy should not be viewed as a means to escape financial obligations, because you will ultimately pay in some fashion. Moreover, not all debts are dischargeable through bankruptcy. If you treat the process seriously, you should achieve the desired outcome.""
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