Under Chapter 7 Bankruptcy, the debtor receives a discharge on all dischargeable debts. There are 19 general classes of debt that are discharged under Chapter 7 Bankruptcy.
How Does Chapter 7 Bankruptcy Work?
A trustee is appointed who collects all non-exempt property, sells the assets and distributes proceeds from this sale to appropriate creditors. Chapter 7 is different from other bankruptcy filings because the debtor needs not make a payment to the trustee.
Even though in some cases this would mean that you will lose all your assets, this need not always be the case. It is strongly recommended that if you are apprehensive and feel you will lose your assets, discuss the matter with your Bankruptcy Attorney.
An added advantage with Chapter 7 bankruptcy is that by signing a reaffirmation agreement a debtor can continue to pay for a car loan or a mortgage on their home. This agreement is in place because as per the US Government Bankruptcy Code a debtor could be allowed to retain some or all of his property.
More Help on How Does Chapter 7 Bankruptcy Work?
- How Does Chapter 13 Bankruptcy Work? - The one advantage of Chapter 13 over Chapter 7 Bankruptcy is the full discharge option which is not applicable under Chapter 7 filing. - read more
- How much does Chapter 7 bankruptcy cost? - One of the most expense costs of filing a personal bankruptcy is hiring a bankruptcy lawyer. If you have a simple no-asset case you may be able to do it without the assistance of a bankruptcy attorney, but most filers will need legal assistance.
- read more