Chapter 7 Bankruptcy Process

Chapter 7 bankruptcy is also known as liquidation or straight bankruptcy because bankruptcy trustees may liquidate some property in order to pay creditors. Through Chapter 7 bankruptcy, some or all of debt is discharged within a four to six month time span. The process is simpler than Chapter 13 bankruptcy which requires a repayment plan after meeting with a credit counselor approved by the United States Trustee’s office. Chapter 7 still requires meeting with a credit agency but the repayment process is left in the hands of the courts.

A bankruptcy trustee will be court-appointed to handle your debt. Their primary purpose is seeing that the creditors are paid the maximum possible amount. Bankruptcy trustees generally are paid more when they are able to supply creditors with more money. The most common method for trustees to repay creditors is through liquidation of the debtor’s assets that are not exempt.

Debts that will survive bankruptcy include child support and alimony payments and student loans. Student loans may be discharged by the court under strict guidelines however the occurrence is rare. Creditors may also object to a debt being discharged if the debt was incurred illegally, for example by fraud or malicious intent.

According to the website of attorneys Gagnon, Peacock & Vereeke, P.C., the filing process for bankruptcy is highly complex and may be confusing to the majority of individuals seeking to file. Bankruptcy is a complicated legal and financial matter that requires extensive knowledge about the options of bankruptcy. If you or someone you know is considering bankruptcy, contact a bankruptcy lawyer in your area to discuss your specific circumstance. They may be able to help find the best course of action to save you money and hardship.

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