Chapter 7 bankruptcy is an important tool for individuals struggling with overwhelming debt to be familiar with. There are certain requirements to qualify so individuals considering filing for Chapter 7 bankruptcy should be familiar with what those requirements are and, in general, with the Chapter 7 bankruptcy process and how it works.
The Chapter 7 bankruptcy process can provide much-needed relief for individuals seeking a fresh financial start. Once the individual has filed for bankruptcy protection, an automatic stay goes into effect which prevents creditor collection actions during the bankruptcy process. This can provide some measure of breathing room for the filing party. The Chapter 7 bankruptcy process is considered a liquidation bankruptcy process that allows the filing party to liquidate non-exempt assets to repay creditors and enjoy a fresh financial start.
The bankruptcy process is not intended to make the filing party start from scratch so understanding property exemptions may help ease some of the anxiety some may feel associated with the process. Certain categories of property are considered exempt from the liquidation bankruptcy process and can include clothing, furniture and vehicles. As the process continues following the filing and the stay, a bankruptcy trustee will be appointed and the creditors will meet to determine how unsecured and secured debts will be handled.
The process ends with a debt discharge in which unsecured debts are discharged and any debts secured by property are addressed in the process. Any individual considering filing for bankruptcy may have understandable questions and concerns about the process which is why it is important to have knowledge of how bankruptcy protection works and may be able to help in difficult circumstances.
Source: Bankruptcy.findlaw.com, “Chapter 7 Bankruptcy Rules Overview,” Accessed April 12, 2018