Chapter 7 bankruptcy protection is one of the two big types of personal bankruptcy protection protecting struggling consumers and their families from the crush of overwhelming debt and financial obligations they cannot meet. Medical debt and other everyday concerns can get struggling consumers into trouble they may wonder how to fix which is why personal bankruptcy options are available to help.
Chapter 7 bankruptcy is commonly referred to as straight bankruptcy or liquidation bankruptcy and provides the opportunity for the filing party who qualifies to liquidate their non-exempt property to repay creditors. To break that down a bit, filing parties qualify according to their income compared to the average income in their state. Additionally, some types of property are excluded, or exempted, from the process and are protected.
Property exemptions in a Chapter 7 bankruptcy can include equity in a home; value of a care; personal property, including jewelry; and wild card exemptions for property no included in a specified category or that has met the limit for a specific property category. Unlike Chapter 13 bankruptcy, which is the other type of personal bankruptcy protection that creates a repayment plan to be repaid over a three to five-year period, a Chapter 7 bankruptcy filing is usually resolved in a matter of months.
In addition, Chapter 7 bankruptcy can help with concerns including creditor harassment, wage garnishment and others by providing a temporary stay of any creditor collection actions while the bankruptcy process progresses which means that the filing party can find some relief from creditors. Chapter 7 personal bankruptcy is an important resource for struggling consumers and their families to take a look at which can help them enjoy debt relief and a fresh financial start.