Filing Bankruptcy Under Chapter 7

by | Jun 30, 2011 | Legal Advice

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Bankruptcy is, perhaps, the most severe form of debt relief options. Tough economic times can often lead an individual to take a serious decision like filing for bankruptcy. This debt relief option offers a few choices to a debtor which allows specific advantages. One such option is Chapter 7.

Chapter 7 is the most common bankruptcy option. Most people file bankruptcy under this option. This alternative may seem to be worsening the financial condition of a debtor initially, but in the long run, once a debtor is issued a discharge, he can start up with a fresh financial prospect.

Chapter 7 code of bankruptcy is also known as liquidation bankruptcy as this option involves liquidation of all the non-exempt assets of a debtor. The liquidated money is then used to pay off the creditors. Applying for Chapter 7 bankruptcy needs a debtor to have a debt income ratio that matches a predetermined measure. Difficult as it may sound, filing for bankruptcy needs a person to seek professional help. It is tedious and complicated process, involving a huge bulk of paperwork.

A bankruptcy lawyer who holds specialty in the field of bankruptcy cases must be hired to have some help in understanding the implications that are involved in a typical bankruptcy case.

A chapter 7 bankruptcy procedure initiates with a debtor appealing for Chapter 7. The court appoints a trustee for taking charge of the properties and assets of a debtor. It is to be mentioned here that some of the property of the debtor that is protected from the claim of the creditors will not come under the liquidation process. Properties like real estate, life insurance bonds that have not yet matured, trade tools, etc. are examples of exempt assets.

Debts that include personal loans, repossession deficiencies, corporate debts, negligence claims, leases and credit cards are amongst the dischargeable debts under the code of Chapter 7. Debts like trust fund taxes, unscheduled taxes, student loans, child/ family support, restitution fines, etc. fall under the category of debts that cannot be discharged through Chapter 7.

Bankruptcy is a severe financial decision and it must not be taken hastily. One must take ample time to think over the possible implications of this decision before proceeding with the legal paperwork. It is imperative to hire a bankruptcy lawyer before filing a case under Chapter 7. Hamilton, NJ has a number of reputed law firms that offer superior legal services.

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