What Is Chapter 7 Bankruptcy?

Posted on December 17, 2014

In Chapter 7 bankruptcy, a bankruptcy trustee erases several (or all) of your debts. During this time the trustee may also sell or liquidate some of your property to repay your creditors and debt.

Chapter 7 bankruptcy is the liquidation via sale of the debtor’s nonexempt property (these normally include items of value that are not reasonable and necessary) and the distribution of these proceeds to the creditors.

An experienced bankruptcy attorney can explain who is eligible to file, how the entire process works, and what happens to your debts and property.

Chapter 7 bankruptcy begins with a debtor filing a petition with the bankruptcy court. In addition to the petition, the debtor must also file the following items:

  • Schedule of income and expenditures
  • Statement of financial affairs
  • Include a schedule of executory contracts and current leases
  • Debtors must also include tax returns for the most recent tax year and tax returns from prior years since the case began

Are there alternatives to Chapter 7 Bankruptcy?

Yes – you can learn more by clicking here.

Some Pros and Cons of Chapter 7 Bankruptcy

Pros

A bankruptcy will stay on your record for years, the time to complete the bankruptcy chapter 7 process – from filing to relief from debt, takes only about 3-6 months. The trade-off is a lasting mark on your credit in exchange for freedom from most of your debt.

Cons

Bankruptcy will hurt your credit for some time. A Chapter 7 bankruptcy can remain on your credit report for up to 10 years.

You will lose property that is not exempt from sale by the bankruptcy trustee. You may lose some of your luxury possessions.

You will lose your credit cards. Credit card debt is one of the most common causes of bankruptcy. You may also be able to obtain new credit cards within one to three years of filing bankruptcy. However, typically the interest rates will be at a higher rate.

Bankruptcy will make it difficult to get a mortgage, if you do not currently have one.

Bankruptcy will not erase your student loan debt. Nothing will erase student loan debt.

You can learn more @ https://www.thelawyersforthepeople.com/bankruptcy/bankruptcy-chapter-7/

One of the primary purposes of bankruptcy is to discharge certain debts to give an honest individual a “fresh start” and another chance. 

We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.