Chapter 7 Bankruptcy:

Chapter 7 bankruptcy, also referred to as the “liquidation” or “straight” bankruptcy chapter, allows an individual or business to liquidate assets in order to pay off debt.

Under Chapter 7, a trustee is appointed by the court to acquire nonexempt property of an individual or business. Any property that has value is in turn sold by the trustee and liquidated into money to pay creditors.

Laws pertaining to Chapter 7 bankruptcy vary in each state of the United States. An individual or business can retain exempt items, including real estate, depending upon the state of residence and applicable federal laws.

Those considering filing for Chapter 7 bankruptcy are already in a world of confusion and frustration. This article will attempt to simplify the process by outlining important aspects about filing for Chapter 7. It will also serve as a way to answer any questions you might have about Chapter 7 Bankruptcy.

First, the filing for Chapter 7 can be done by anyone who resides in, does business in, or has property in the United States. The only exception is for a debtor who was involved in another bankruptcy case that was dismissed in the previous 180 days.

Furthermore, a debtor who is not eligible for Chapter 7 discharge should not file for Chapter 7. A Chapter 7 discharge is a court order releasing a debtor from all dischargeable debts and ordering the creditors not to attempt to collect them from the debtor. Those who are not eligible for Chapter 7 discharge include debtors who have defrauded creditors or withheld information from trustees in the past. It is also not wise to file for a Chapter 7 if a debtor’s current income is sufficient enough to pay a substantial amount of the debt.

If you feel you meet the criteria for filing for Chapter 7, you can file your case at the office of the clerk of the federal bankruptcy court in the district in which you have resided or maintained a business for most of the previous 180 days. The bankruptcy court can be found at the local United States district court.

The filing fee is $274 if filing single or joint (married couples are allowed to file together). This fee does not include any fees charged by a debtor’s attorney.

The next most important question asked by most facing Chapter 7 is what if there is no nonexempt property for the trustee to collect? If the debtor does not have nonexempt property, the court will send a notice to the creditors advising them that the debtor has no assets from which to pay them.

The court will tell the creditors it is unnecessary for them to file claims. If assets are later discovered, creditors will then be given an opportunity to file claims. Approximately 50 percent of all Chapter 7 cases that are filed are no-asset cases such as this.

A word of advice: If you are filing for Chapter 7, make sure the value of your nonexempt assets are as low as possible at the time you file. This is not an illegal act. It is simply taking advantage of loopholes in the system.

The most common nonexempt liquid assets, in which the trustee will most likely look for, include cash, bank accounts, rent credits or deposits, tax refunds, accrued earnings and benefits, and sporting goods (guns, fishing gear, cameras, skis, etc.).

Chapter 7 cases last an average of four months if the debtor does not have nonexempt assets. On the other hand, if nonexempt assets exist, the trustee can take up to six months or longer to gather all the assets and perform the necessary paperwork and procedures.

Once the case is complete, the debtor and creditors will be notified by mail with a “Discharge of Debtor” form. This form is a court order that discharges a debtor from all dischargeable debt. A debtor can not file for Chapter 7 again for at least another six years.

As with any court proceeding, many factors are involved with a Chapter 7 filing. You can file without a lawyer in order to save the cost for fees. However, it is advisable for you to explore all avenues of a Chapter 7 case, and the best way to do that is to enlist legal assistance.

Information on Bankruptcy (New!) - Bankruptcy may not be for everyone who is behind on bills, but for some, bankruptcy can provide the fresh start they need to free them from financial ruin and get on with their lives. As the American economy flounders, many people who used to live at a fairly high standard of living are finding themselves in financial trouble. The news runs rampant with stories of credit card payments doubling, interest rates being hiked up, and credit limits being spontaneously lowered by banks to amounts lower than what debtors already owe on their unsecured credit card debts...

Alternatives to Bankruptcy - Record levels of American consumers file for bankruptcy each year. The idea of putting an end to overwhelming debt and silencing the calls of harassing creditors can make this seem like an undeniably appealing option. While declaring bankruptcy may seem like a quick fix for financial hardships, in many cases it causes new kinds of challenges and stresses for years to come...

When to File For Bankruptcy - Bankruptcy is a major decision when you are facing mounting debt. For those who cannot pay off their debts, bankruptcy is a way to maintain essential assets while getting creditors off your back. On the other hand, bankruptcy also impairs your ability to get credit for up to 10 years. So how do you know when to file for bankruptcy?...

New Bankruptcy Laws - On October 17, 2005, a new bankruptcy law took effect. Congress felt these new laws were needed for several reasons: • When a person files for bankruptcy, the companies who do not get paid pass those expenses on to their other consumers in the form of higher prices...

How to Avoid Bankruptcy - In today’s economy, you may be finding that simply treading water in the budget no longer works. Any little, or not so little, wave—a missed direct deposit, a mortgage adjustment, or even a 10-cent hike in gas prices—can threaten to sink your economic boat. Sometimes, bankruptcy seems like the only way out and the only way to make the phone stop ringing...

Chapter 11 Bankruptcy - There are four main bankruptcy chapters that are available to individuals. Chapter 7 bankruptcy, often called a “straight bankruptcy,” allows for liquidation of assets and can be used by either consumers or businesses. Chapter 12 was set up entirely for the “family farmer” or the “family fisherman.” Chapter 13, the most common one for individuals, is also known as the “wage earner bankruptcy.” The purpose of this article is to give more detailed information on the remaining bankruptcy, Chapter 11. Chapter 11 bankruptcies are not often used by individuals because in order to file for one, the individual must owe more money than that allowed in a Chapter 13 bankruptcy (i.e., they must owe at least $336,900 in unsecured debts, or $1,010,650 in secured debts) and they must have an income that would make it possible for them to pay off...

Chapter 13 Bankruptcy - Some consider filing for Chapter 13 bankruptcy as a stay of execution, while others view it as a dignified means of getting out of a financial mess. Once upon a time, filing for Chapter 13 bankruptcy was considered an unintelligent choice, especially with the availability of Chapter 7. Chapter 13 bankruptcy filing is a way for U.S. citizens to undergo financial reorganization as supervised by a federal bankruptcy court. In other words, a system for repayment of debt is created with the law insuring that creditors get their money back....

Chapter 7 Bankruptcy - If you are facing what seems to be an insurmountable amount of debt, filing for Chapter 7 of the United States Bankruptcy Code might be the best possible solution. Chapter 7 bankruptcy, also referred to as the “liquidation” or “straight” bankruptcy chapter, allows an individual or business to liquidate assets in order to pay off debt. Under Chapter 7, a trustee is appointed by the court to acquire nonexempt property of an individual or business. Any property that has value is in turn sold by the trustee and liquidated into money to pay creditors. Laws pertaining to Chapter 7 bankruptcy vary in each state of the United States. An individual or business can retain exempt items, including real estate, depending upon the state of residence and applicable federal laws. Those considering filing for Chapter 7...