Chapter 7 Bankruptcy is discussed in the Chapter 7 of Title 11 of the same code. For most of the people who want to be declared bankrupt, this is the main set of regulations. Chapter 7 bankruptcy involves the elimination of all credit card debt and a portion of tax debt. Through chapter 7, our firm can help you stop repossession and wage garnishment. Chapter 7 Bankruptcy, sometimes call a straight bankruptcy is a liquidation proceeding. The debtor turns over all non-exempt property to the bankruptcy trustee who then converts it to cash for distribution to the creditors.

Chapter 7 Bankruptcy is the most common form of bankruptcy. It is a liquidation proceeding in which the debtor’s non-exempt assets are sold by a trustee and the proceeds are distributed to creditors according to the priorities established in the Code. Chapter 7 bankruptcy is for those who cannot reasonably emerge from debt on their own and, thus, require help from the law. It is not for people who make poor financial choices and then seek absolution. Chapter 7 bankruptcy allows an individual or business to retain some property that is exempt under the law, but most assets are sold, or liquidated, to pay off creditors.

Chapter 7 Bankruptcy is liquidation bankruptcy both for consumers and for businesses. In liquidation bankruptcy or Chapter 7 bankruptcy, your responsibility of paying off your debts is completely relieved and the debts disappear, though not without leaving a mark on your credit history.

Individual debtors get their discharge within 4-6 months of filing the case. The discharge affects dischargeable debts that existed at the commencement of the case. Individuals can also file for Chapter 7 Bankruptcy. Individuals are also required to take a budget class that helps those who file bankruptcy to get their finances re-organized in order to create better spending habits. The fees for these classes are charged according to the state that the individual lives in but can cost up to $200.

Individuals filing for Chapter 7 or Chapter 13 bankruptcy must take a credit counseling course within 180 days prior to filing for bankruptcy protection.

Trustee has a state-by-state list of approved agencies . Trustee would request the court convert the Chapter 7 filing to a Chapter 13 case with a repayment plan. The Chapter 7 Bankruptcy debtor can defend his Chapter 7 filing by demonstrating financial hardship and an inability to repay creditors in Chapter 13. Trustee filed a notice of a “b(3)” challenge which means that the U.S. Trustee may consider the Chapter 7 bankruptcy to be an abuse.

Trustee, the bankruptcy arm of the Justice Department, will appoint one or more committees to represent the interests of creditors and stockholders in working with the company to develop a plan of reorganization to get out of debt. The plan must be accepted by the creditors, bondholders, and stockholders, and confirmed by the court.

Debtors who do receive calls or letters from creditors should refer the creditors to their attorney. Debtors engaged in business would usually not like the prospects of liquidation and Chapter 11 might be a better option for such individuals associated with corporations and partnerships. Also, individuals with regular income if in a debt situation would be better suited to file a Chapter 13 bankruptcy .