When it comes to consumer-filed bankruptcy in the U.S., Chapter 7 bankruptcy is one of really only two options to choose from. It is the most common and most sought after type of bankruptcy. Here are a few basics to take note of:
• Also referred to as “straight bankruptcy” or “liquidation”
• A court-appointed trustee gathers all the debtor’s non-exempt assets and liquidates them
• The proceeds are used to pay off the debtor’s creditors, starting with secured creditors and then working down the list
• After about four to six months, all the debtor’s dischargeable debts are legally absolved
NOTE: In an attempt to curb the influx of successful Chapter 7 bankruptcy filings, the federal government passed the Bankruptcy Abuse Prevention and Consumer Protection Act in 2005. This act made it more difficult to file Chapter 7 by placing strict eligibility requirements on it in the forms of a “means test.”
Learn More About Chapter 7 Bankruptcy Today
Despite the BAPCPA, Chapter 7 bankruptcy filings are still being successfully filed by consumers all over the country. There is a lot more to know about Chapter 7 than what can be learned by a few bulleted points. It is best to take your most specific and pertinent questions to a licensed bankruptcy attorney in your area. He or she will be able to look at your case and tell you how federal and state bankruptcy laws will see your bankruptcy filing.
Related Links:
