Understanding The Basics of Bankruptcy Law Chapter 7
People are suggested to file bankruptcy when faced with an extreme financial crisis. It is generally considered the last option. Bankruptcy remains on the credit record of the filer for a decade. After filing for bankruptcy, the filer is required to disclose their finances and all the debts and assets held by them. These details are submitted under penalty of perjury. If you are unsure about your bankruptcy case, consult a Chapter 11 business bankruptcy attorney handling similar matters.
Bankruptcy is beneficial to people as it helps discharge deaths and automatics day. Automatics day is effective after the petition is filed, and as a result, the creditors are prohibited from taking any legal actions against the debtor. It stops lawsuits, garnishment, foreclosures, and repossession made against the filer of bankruptcy. The automatic stay also encourages creditors to end any contact with the debtor. If the creditors try contacting their debtor after the automatics day, it is considered a violation of the state, which the court can punish. The discharge is released at the end of the case, which leads to a permanent end of liability regarding the debt held by the filer.
Chapter 7 or straight bankruptcy
Any individual, corporation, limited liability company, or partnership can file for chapter 7 bankruptcy. It is also known as liquidation. As per the guidelines of chapter 7, the appointment of a bankruptcy trustee is made when the petition is filed. The trustee must possess the properties owned by the debtor, which are not exempted or under a mortgage. They are responsible for the sale or purchase of the assets. However, suppose the property or asset is considered as collateral, like home mortgages or car loans. In that case, the debtor will only retain it if they continue to pay the remaining debt. Debts not secured by the owner, like medical bills, credit cards, and signature loans, are subject to discharge under chapter 7 of bankruptcy. Secure debts like home mortgages in car loans are also discharged if the property owner ends up surrendering to the lienholder.
However, most taxes, student loans, and support obligations are not subject to discharge as per the chapter 7 bankruptcy. Chapter 7 cases are considerably less complex and finalized in under four months. However, if the property is under the trustees’ administration, the case will be kept open until it is finalized. However, this does not prolong the discharge.
Bankruptcy is a very specific field of law. If you are at a point in life with bankruptcy seems like the only option available for you, make sure to consult an expert regarding your case. It can help you in reducing your worries and devising a plan that helps in resolving all the issues effectively