Chapter 7 Bankruptcy Information
Chapter 7 bankruptcy is one of the most frequently-filed chapters and may be helpful for people in a broad set of circumstances. Consulting with an attorney is the most effective way to discover if Chapter 7 is applicable in an individual case, but knowing a few basic facts about chapter 7 bankruptcy information may be useful in considering personal filing options.
One of the most important aspects of understanding bankruptcy is differentiating between chapters; while some elements of different bankruptcy types may seem similar, different chapters are in fact distinct and have been designed with divergent financial situations in mind.
Why Do People File Chapter 7 Bankruptcy?
Chapter 7 bankruptcy is primarily targeted towards those who have accumulated debt in amounts they're unable to repay. Credit card debt, unpaid medical bills, and certain types of unsecured debts can be addressed with a Chapter 7 filing, though of course individual circumstances will have an effect on the eventual outcome of a bankruptcy case. A strong draw for many people who file for Chapter 7 bankruptcy is the ability to retain most or all personal assets.
Misconceptions surrounding Chapter 7's ability to liquidate assets exist, but many people who have completed the process have been able to do so without losing their homes, cars, or other possessions. In some instances, the trustee involved in a Chapter 7 bankruptcy filing may identify certain assets capable of being liquidated and used as repayment to lien-holders or creditors; checking local laws regarding exempt assets and talking with an attorney about any potential losses can lead to a firm idea of how a filing would impact personal property.
Immediate Benefit of Filing Chapter 7 Bankruptcy
The most immediate benefit of a Chapter 7 bankruptcy filing for many people is the relief it affords from debt collection and harassment from creditors. When a filing is successful, a Chapter 7 filer may find that calls and letters regarding collection cease, and that attempts to repossess personal effects are also halted. The trade-off, however, is that a record of the bankruptcy filing remains visible for ten years, making it more difficult for some people to obtain credit.
Though it is not impossible to locate new sources of credit for large purchases after completing a Chapter 7 filing, the record can have a noticeable impact on credit arrangements for the ten-year period. Balancing the potential benefit of a filing with the potential disadvantages can be a difficult process, though legal advice from a bankruptcy attorney can go a long way towards making the decision easier.
The Chapter 7 Bankruptcy Attorney
A Chapter 7 bankruptcy attorney typically leads their client through the required paperwork and helps to prepare for the "341 Meeting of the Creditors," an event that allows the trustee to determine eligibility for bankruptcy and to identify any assets that are not covered by state or federal exemptions. Once this type of bankruptcy is chosen, many people who file for Chapter 7 find that the process is fairly swift and smooth, and that questions that arise during the filing can be directed to an attorney to ensure personal rights and responsibilities are understood.