Bankruptcy is a legally declared inability of individuals or businesses to
discharge their debts. A declared state of bankruptcy can be requested not only
by creditors in an effort to get what they are owed but also by the insolvent
individual or organization. If it is difficult to repay debts, declaring the
bankruptcy may be the right solution to debt problems.
Out of six basic types of under the Bankruptcy Code, Chapter 7 is a
“liquidation” of nonexempt assets to pay debts. In a court-supervised procedure,
a court appoints a trustee who liquidates the non-exempt assets of the debtor’s
estate and makes distributions to creditors. The Bankruptcy Code allows the
debtor to keep certain exempt property; but a trustee will liquidate the
debtors remaining assets.
According to the amendments to the Bankruptcy Code enacted in to the
Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, if a debtor’s
income is in excess of certain thresholds, the debtor may not be eligible for
chapter 7 relief. Filing a petition under chapter 7, automatically stays most
collection actions against the debtor or the debtors property, but potential
debtors should realize that the filing of a petition under chapter 7 might
result in the loss of property.
After Chapter 7 bankruptcy, one will not longer owe money on credit cards,
unsecured loans, unpaid hospital, medical and utility bills and unpaid rent. But
debts like state and federal taxes (unless they are more than three years old),
child support required by law; alimony, government-backed student loans, debts
due to fraud, fines, penalties and debts due to willful injury to another person
or property are not eliminated by Chapter 7 bankruptcy.
Just a few months after the petition is filed, in most chapter 7 cases, the
individual debtor receives a discharge that releases debtor from personal
liability for certain dischargeable debts. Thus, chapter 7 Bankruptcy is
designed to give the debtor a new start and a chance to live with sound
financial management. Finance:Bankruptcy
Chapter 7
Bankruptcy provides detailed information about chapter 7 bankruptcy, chapter
7 bankruptcy law, filing chapter 7 bankruptcy, chapter 7 bankruptcy form and
more. Chapter 7 Bankruptcy is the sister site of Roth IRA Contributions.
