Chapter 7 Bankruptcy
Chapter 7 bankruptcy is also known as straight bankruptcy and it is the most common form of bankruptcy in the United States. Chapter 7 differs from other forms of bankruptcy because, unlike chapter 11 or chapter 13 bankruptcy, your debts are not reorganized. Instead, when you file chapter 7 bankruptcy certain assets are liquidated, or turned into cash, and divided among your creditors, and then any of your remaining debts are discharged, or canceled.
Who Can File for Chapter 7?
Consumers in every state are allowed to file for chapter 7 bankruptcy. However, in order for their bankruptcies to be approved, they must meet basic eligibility requirements. Individuals must pass their states’ means test, complete credit counseling, pay required fees, and comply with bankruptcy laws.
Once people have filed chapter 7 bankruptcy petitions, the U.S. Bankruptcy Court will appoint a trustee. The trustee is supposed to review people’s assets and debt and mediate discussions with people’s creditors. Additionally, trustees are in charge of liquidating assets. Liquidation occurs when assets and valuable property are sold for cash, which is divided among creditors to repay people’s debt.
When the chapter 7 bankruptcy process is complete, people’s debts are discharged, even if they could not be paid off entirely. If you have gone through bankruptcy, this means that you get to start over, but your credit report will show that you declared bankruptcy for the next 7 to 10 years. For this exact reason, Marie F. Benjamin Law Firm offers this service to help individuals achieve the fresh start they are seeking.
Chapter 7 & Liquidation
When an individual files for chapter 7 bankruptcy, certain assets are exempt from being liquidated. These exemptions vary from state to state. For example, in Florida homes of certain sizes are exempt. However, if you bought your home within 40 months of filing for bankruptcy, you can only exempt $125,000 of the home’s value.
Keep in mind, certain individual debts cannot be cleared by bankruptcy. For example, spousal support and child support cannot be discharged by filing for bankruptcy. In order to have your spousal or child support adjusted or canceled, you must file a petition under family law in a civil court. Additionally, student loans are usually not discharged under chapter 7 bankruptcy, nor are most tax claims or fraud-related debts.
Chapter 7 Bankruptcy Lawyers
Declaring bankruptcy is a decision that will have a substantial effect upon your life and finances. Make sure your decision to declare chapter 7 bankruptcy is thought through carefully and you speak with a knowledgeable attorney before you pursue this course of action. At Marie F. Benjamin Law Firm, our bankruptcy lawyer can walk you through all options for resolving your debt and help you determine what path is best for you. Call us today at 407-492-8056 to set up your free initial consultation. We are proud to present our clients with affordable legal services and flat fees. If you are facing financial hardships, we can also work with you to set up a payment plan that is tailored to your budget.
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