Wednesday, April 15, 2009

Chapter 7 Bankruptcy



Posted by Craig Rozelle

Chapter 7 bankruptcy is designed to be a court supervised procedure by which a trustee collects the assets of the debtor’s estate. Then the trustee liquidates the assets into cash and makes payments to creditors. Some of these assets are exempt however and the debtor is allowed to keep some of the assets. The secured creditors are just given the secured assets instead of liquidating them. Because there is usually little or no nonexempt property in most chapter 7 cases, there may not be an actual liquidation of the debtor’s assets. These cases are called no-asset cases. Usually debtors with assets that they wish to keep and that are not covered by exemptions file chapter 13. Each state has their own specific rules for chapter 7 bankruptcy. A creditor holding an unsecured claim will only get money if they are able to prove that they are owed assets in a bankruptcy court. In most chapter 7 cases, the debtor receives a discharge that releases the debtor from personal liability for certain dischargeable debts. The debtor normally receives a discharge three to four months after the petition is filed. Filling for chapter 7 immediately stops collection from creditors until the proceedings are finished.

Sources:
http://www.bankruptcyinformation.com/chapter-7-bankruptcy.htm
http://www.uscourts.gov/bankruptcycourts/bankruptcybasics/chapter7.html
http://www.moranlaw.net/chapter7.htm

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