More About Chapter 7 Bankruptcy
The most widespread type of bankruptcy is called Chapter 7 Bankruptcy. In this type of bankruptcy, a debtor surrenders or forfeits any non-exempt assets, which are then liquidated and used to pay creditors, allowing the debtor to discharge his or her debt. These assets are usually in the form of personal belongings or property and are treated differently from state to state. In most states, filers can keep most personal items and household goods, while property exemptions vary. Absent the ability of the debtor to maintain payment in full on real property assets, these assets are usually forfeited.
Certain types of debt are not discharged as a result of Chapter 7 Bankruptcy. Included here are child support and alimony, as well as any fines that are the result of negligent conduct and criminal behavior. In addition, unsecured debt incurred within 40 days of filing for Chapter 7 Bankruptcy cannot be discharged. Furthermore, unless a debtor fulfills strict hardship guidelines, student loans are usually not forgiven. Debts are typically discharged within three to six months of the filing date, providing a bankruptcy is uncontested. Creditors can and do contest bankruptcy proceedings in the event of fraud, breach of trust, or other inappropriate conduct by the debtor. Such behavior frequently occurs, for example, when a debtor applies for new credit, usually one to two months before filing for bankruptcy, and then proceeds to run up his or her bills.
Chapter 7 Bankruptcy, which differs from Chapter 13 Bankruptcy, provides for immediate debt relief by stopping creditors from garnishing wages, turning off utilities, foreclosing on property or pursuing other forms of collection. Whatever your financial status, Chapter 7 Bankruptcy remains an available option no matter how dire your debt situation may be. However, Chapter 7 Bankruptcy should never be entered into lightly because of its deep psychological impact and its lasting influence on your credit report and credit score. Bankruptcy will continue to show on your credit report for seven years and severely curtails your future ability to borrow money.
DRO believes there are debt help alternatives that make more sense than bankruptcy. Other kinds of debt relief include: Debt Negotiation, Credit Card Debt, Debt Management, Consumer Credit Counseling, and Debt Consolidation Program.
