WHAT IS CHAPTER 7 BANKRUPTCY?
Simply stated filing bankruptcy is a legal way to eliminate or reduce your bills. Bankruptcy is referred to in the Bible and was included in The United States Constitution. Our economy would break down if individuals and companies were unable to eliminate debt under appropriate conditions.
The federal court system is exclusively used for bankruptcy cases, although states are permitted to provide special rules. The idea is to allow people and businesses who have financial problems to get a fresh start. Over one million Americans file for relief from debts through bankruptcy each year. With our service you can file bankruptcy online today and become debt free.
CHAPTER 7 BANKRUPTCY DEFINED BY THE US BANKRUPTCY COURT
Chapter 7 Bankruptcy, entitled Liquidation, contemplates an orderly, court-supervised procedure by which a trustee takes over the assets of the debtor´s estate, reduces them to cash, and makes distributions to creditors, subject to the debtor´s right to retain certain exempt property and the rights of secured creditors. Because there is usually little or no nonexempt property in most chapter 7 bankruptcy cases, there may not be an actual liquidation of the debtor´s assets. These cases are called "no-asset cases." A creditor holding an unsecured claim will get a distribution from the bankruptcy estate only if the case is an asset case and the creditor files a proof of claim with the bankruptcy court. In most chapter 7 bankruptcy cases, if the debtor is an individual, he or she receives a discharge that releases him or her from personal liability for certain dischargeable debts.
The debtor normally receives a discharge just a few months after the petition is filed. Amendments to the Bankruptcy Code enacted in to the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 require the application of a "means test" to determine whether individual consumer debtors qualify for relief under chapter 7. If such a debtor´s income is in excess of certain thresholds, the debtor may not be eligible for chapter 7 bankruptcy relief.
CHAPTER 7 BANKRUPTCY BACKGROUND
Filing chapter 7 bankruptcy cases does not involve the filing of a plan of repayment as in chapter 13. Instead, the bankruptcy trustee gathers and sells the debtor´s nonexempt assets and uses the proceeds of such assets to pay holders of claims (creditors) in accordance with the provisions of the Bankruptcy Code. Part of the debtor´s property may be subject to liens and mortgages that pledge the property to other creditors. In addition, the Bankruptcy Code will allow the debtor to keep certain "exempt" property.
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