Chapter 7 Bankruptcy
Chapter 7 bankruptcy or “straight bankruptcy” is the most popular form of bankruptcy because it allows the debtor to “wipe the slate clean” and start fresh. Chapter 7 bankruptcy is available to individuals and couples. The bankruptcy is normally completed within 3 ½ to 4 months after filing. Once a debt is discharged, it is eliminated and you never have to pay that debt again! Most debtors who file Chapter 7 bankruptcy can keep most of their exempt property.
Chapter 7 bankruptcy is generally used by debtors who lack sufficient income to cover their outstanding debts after taking care of their basic living expenses, and who have no hope of ever repaying their creditors. Chapter 7 bankruptcy is often used to eliminate debts such as credit card bills, payday loans, medical bills, repossessions, and personal loans. Chapter 7 bankruptcy is the most common form of bankruptcy. Approximately two-thirds of all bankruptcies filed are Chapter 7 bankruptcies. Chapter 7 bankruptcy is often used by folks who have become overwhelmed by their debts. This can often occur when someone becomes unemployed, gets divorced, or becomes burdened by large medical bills. Once you file Chapter 7 bankruptcy, you can begin to rebuild your life without worrying that your wages will be garnished, your bank account attached, or your property seized. The creditors cannot call you at work or threaten you or harass you. Remember that the bankruptcy laws were designed to help you. You don’t have to allow creditors and collection agencies to take away from you everything you’ve worked for all your life!
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Automatic Stay - Precludes and halts all collection activities from creditors and collection agencies. You may even be able to get back a repossessed automobile by filing bankruptcy.
Assets - Assets are generally anything of value. For example: property, real estate, cash, notes, stocks, bonds, accounts receivables and securities.
Chapter 7 Bankruptcy - This is the most common form of bankruptcy filed by people in debt, in order to eliminate their debts in order to obtain a “fresh start.” Chapter 7 bankruptcy is most often used to eliminate credit card debts, pay day loans and medical bills.
Chapter 13 Bankruptcy - Simply put, is the reorganization of consumer debts with a new payment schedule. It is often filed to stop home foreclosures, stop auto repossessions and to pay IRS taxes over a 60 month period.
Creditor - A person or entity to whom money is due.
Discharge - What you wish to obtain by filing bankruptcy so your debts are eliminated.
Exemption - Assets that cannot be touched by creditors during bankruptcy proceedings.
Insolvent - Unable to pay ones debts.
Secured Debt - Debt that is backed by collateral. For example: mortgage or a car loan.
Trustee - Person appointed to oversee the completion of a bankruptcy filing.
Unsecured Debt - debt that is not backed by collateral. For example: credit card debts, pay day loans and medical bills.