Frequently Asked Questions Regarding Chapter 7 Bankruptcy
The bankruptcy legislation is designed to give someone who is hopelessly burdened with debt the opportunity to free himself of the debt and have a fresh financial start. To go into bankruptcy it is necessary to be well informed, because you have to make several choices and you must know which one best suits you. In the next few lines we will try to answer the most common questions regarding bankruptcy. What is Chapter 7 Bankruptcy? Also called a straight bankruptcy, the Chapter 7 Bankruptcy is the fastest way to achieve a fresh financial start. All non-exempt properties of the debtor are turned over to the bankruptcy trustee who then sells them and takes care of the distribution of the cash between the creditors. After that, the debtor receives a discharge of all dischargeable debts usually within four months, so, as you can see, the Chapter 7 Bankruptcy will give that person a relatively quick "fresh start". What is Chapter 13 Bankruptcy? Also called Debt Adjustment, Chapter 13 Bankruptcy implies that most of your debts are reorganized into a single monthly payment. You will no longer need to pay all your debts: to be more precise you will be asked to pay only as much as you can afford for 3 to 5 years. At the end of this period, debt not paid is discharged. How do I know which chapter to file? Choosing which chapter of bankruptcy is best for you is not an easy job to do. Usually is better to consult a lawyer who will take in consideration whether you are behind on secured debts, what kind of debts you have and the amount of your regular income, before giving you an answer. In order to be eligible to Chapter 7 Bankruptcy you must pass the means test which is design to determine if you are able to pay a part of your debts. Am I allowed to change from a chapter of bankruptcy to another? If you want to change from one chapter of bankruptcy to another one for which you are eligible you have to make a short and simple written demand. Sometimes, a small fee is also required as well as a re-evaluation of your assets and debts (for converting from Chapter 13 to Chapter 7 for example). Who will find out about the Bankruptcy? The information regarding someone's bankruptcy is public. Regardless this fact, usually, people you know will not find out that you went bankrupt. The Chapter 7 Bankruptcy or others types of Bankruptcy that you filed will be on your credit record for ten years. How long should I wait to file Chapter 7 again? Since October 17, 2005, when a new law concerning bankruptcy took affect, a debtor can only file Chapter 7 bankruptcy once every 8 years. Which are the main reasons to file for Bankruptcy? · A good reason to file Chapter 7 Bankruptcy is a desire to eliminate the legal obligation to pay many of your debts and have a fresh start. If you or a family's member had an unfortunate accident or recently discovered that he or she suffers of an illness which requires an expensive treatment, filing bankruptcy can help you go on. · A very common reason for bankruptcy is the loss of work. If all of a sudden one of both of the spouses loses his or hers job, it can be almost impossible to continue paying all the bills as before the unfortunate event, without failing bankruptcy. · Some other reasons are the desire to stop the harassing behaviour from creditors or to put an end to wage garnishments. |
