Chapter 7 Bankruptcy: Re-Establish Your Financial Position
Chapter 7 of the bankruptcy law allows individuals and businesses the
option to liquidate assets and pay creditors thus discharging them from
non-payable debts while releasing them from hazardous debt collection.
Insolvency is in some cases the only route to managing a financial
crisis giving debtors the hope to a future minus the unpleasantness of
Also termed as straight bankruptcy, Chapter 7 insolvency discharges individuals and businesses from significant debt by allowing creditors to be paid back all or some of the money owed from the debtor’s assets. To be eligible to file under this bankruptcy type, individuals need to provide an income and expense report and related paperwork for legal examination to help ascertain if they qualify for insolvency.
‘Means testing’ encompasses the range of assessment criteria to decide whether an individual is eligible to file for insolvency and the type of bankruptcy to file for. In general, if your family income falls below the median range in your state you may be able to file for bankruptcy. In the event that your earnings exceed the average income range, you may still opt for a Chapter 13 bankruptcy which enables you to repay debts over a longer period of time. Filing under this insolvency type is recommended if you have disposable income sufficient enough to pay more than 25 percent of unsecured debts. In addition to income and budget analysis, your bankruptcy filing needs to be accompanied by credit counseling and income management sessions before debts can be discharged.
Filing for Bankruptcy
Filing for insolvency under Chapter 7 begins with your bankruptcy attorney submitting an official petition and your financial statement along with the complete listing of creditors and corresponding claim totals. Income and asset-related documents are necessary but initial filing can merely list properties in your name as well as basic income and expense statements.
The most important benefit to filing for bankruptcy is that creditors must abandon all collection attempts if an individual chooses to file. This ‘automatic stay’ protects debtors from hazardous debt collection practices while also ensuring that creditors cannot file new lawsuits against you when your case is live. In addition, filing for insolvency helps buy time while you assess whether claims can be eventually paid off, or if any out-of-court settlements can be negotiated with creditors.
While some assets cannot be liquidated, individuals filing for bankruptcy will have their non-exempt property holdings liquidated and payments honored, and opting for debt reaffirmation can help protect assets. If you wish to retain specific properties, seek legal counsel from your bankruptcy lawyer to help create an agreement with the creditor to this effect. By affirming that you will pay back any money owed, you can retain your car or protect your property from liquidation.
Filing for a Chapter 7 bankruptcy can offer individuals respite from immense financial strain by removing any obligation to pay off funds directly, and prohibits creditors from initiating collection. Insolvency is a difficult process but can create positive outcomes in the long-term helping you rebuild your life with dignity.
Source: Free Articles from ArticlesFactory.com
ABOUT THE AUTHOR
If you find yourself deciding to file bankruptcy, select a chapter 7 austin lawyer who is experienced in related issues and can help get you back on track. Learn more about one professional here: http://www.bankruptcyattorneyofaustin.com.