Chapter 7 bankruptcy is a personal bankruptcy option that can provide debt relief for struggling consumers. Individuals considering bankruptcy may have many questions and it is important for them to get answers and understand the steps in the process.
Chapter 7 bankruptcy is a liquidation bankruptcy option that allows the filing party to liquidate non-exempt assets to repay creditors. The process begins when the filing party files a bankruptcy petition. It is then determined if they meet the requirements to qualify to file for Chapter 7 bankruptcy. The means test, previously discussed on this blog, is used to determine if they qualify. Fear not if they do because other personal bankruptcy options may be available to them.
It is also helpful to note that the filing party may be able to change personal bankruptcy options based on their circumstances and if those circumstances change. Once the filing party has filed for Chapter 7 bankruptcy, and automatic stay goes into effect preventing creditor collection actions during the bankruptcy process which allows them, along with assistance from the bankruptcy court, to work out the financial issues they want to address in bankruptcy. They are then able to liquidate assets to repay creditors but it is important to note that some assets are exempt from the process and thereby protected.
Filing parties and those considering filing for Chapter 7 bankruptcy protection should be aware that the bankruptcy court will help guide the process and once it is complete, the filing party will enjoy a debt discharge. There is a lot for struggling consumers to know and understand about the bankruptcy process and because there are also frequently misconceptions about it, it is helpful for them to be as familiar with it as possible when they are considering their options for debt relief.