A simple grounding in the fundamentals of bankruptcy is essential for anyone who thinks they might have to file bankruptcy in the near future. Even if you retain the most successful bankruptcy lawyer in the country it is still important that you educate yourself on a few bankruptcy basics before going into that initial evaluation.
When it comes to consumer-filed bankruptcy in the U.S., Chapter 7 bankruptcy is one of really only two choices to choose from. It's the most common and most sought after type of bankruptcy. Here are a few basics to take note of:
Chapter 7 is also referred to as "straight bankruptcy" or "liquidation."
A court-appointed trustee gathers all the debtor's non-exempt belongings and liquidates them.
The revenue is used to pay off the debtor's lenders, starting with secured lenders and then working down the list.
After about 4 to 6 months, all the debtor's dischargeable debts are legally absolved.
NOTE: In an attempt to control the influx of successful Chapter 7 bankruptcy filings, the federal government passed the Bankruptcy Abuse Prevention and Consumer Protection Act in 2005. This act made it more difficult to file Chapter 7 by placing strict eligibility requirements on it in the forms of a "means test."
Learn More About Chapter 7 Bankruptcy Today
Regardless of the BAPCPA, Chapter 7 bankruptcy filings are still being successfully filed by consumers all over the country. There is a lot more to know about Chapter 7 than what could be learned by a few bulleted points. It is best to take your most specific and pertinent questions to a licensed bankruptcy lawyer in your region. He or she'll be able to look at your situation and tell you how federal and state bankruptcy laws will see your bankruptcy filing.
Related Links:
How to File Chapter 7 Bankruptcy
