Chapter 7 of the bankruptcy code allows individuals and businesses to resolve their debt issues. It is one of the most common bankruptcy laws currently used in the U.S. It is also perceived as the simplest form of bankruptcy available to individuals and corporations.
This chapter provides laws for liquidation i.e. sale of debtor’s non-exempt property to pay off the creditors. Debtors may be able to get rid of their debt through the process of liquidation. However, when filing for bankruptcy, the debtor should ensure that they fulfill the eligibility criteria. Note that individuals who have been involved in dismissed bankruptcy cases in the last 180 days are not eligible for filing under Chapter 7. If the debtor fails to fulfill the eligibility requirements, a bankruptcy court may convert the case to a Chapter 13 bankruptcy.
The most crucial part of the filing process is to list all of your debts and assets along with recent financial history. Any non-dischargeable debt should also be listed. All creditors must be clearly listed alongside their accurate mailing address.
In a chapter 7 bankruptcy case, a specific amount of property may be exempt from liquidation; however, any or all remaining non-exempt property is liquidated by a trustee and the proceeds are passed on to the creditors. It is possible that all of the debtor’s assets may be exempt from liquidation, in which case the trustee files a no-asset report with the court.
Even though the process of filing for bankruptcy under Chapter 7 seems simple, getting suitable help will guide you towards success. It is advised to seek consultation from an experienced attorney to help you decide whether you need legal representation or not.