Chapter 7 bankruptcy statute, also also called straight bankruptcy, is essentially a method of liquidation. As a debtor, you must hand over all your property to the trustee appointed by the court (with the exception of the excluded one). Then the trustee sells or adjusts the cash assets that are returned to the creditors.Do you want to learn more? Visit Attorney Harry C Kaufman.
As a debtor, you will be discharged within up to four months.
Why is chapter 7 of bankruptcy law so popular?
Chapter 7 bankruptcy will provide you with an opportunity for a new start if you have no property to lose. Or so it was before the amendments to the bankruptcy law of 2005.
Chapter 7 bankruptcy law is, without a doubt, the most common form of bankruptcy filed in the US. Usually, when his debts become unbearable, it is sued for either by a person or a company (business file usually for Chapter 11). You can choose to file for it by yourself or the court may force the decision upon you.
You would be forced to sell all of your assets if you are a company, return money received by selling to the creditors and shut down your service. The practice is similar for individuals filing under Chapter 7 bankruptcy law, with the only difference being that you have nothing to shut down.
Be mindful that such kinds of debts will no longer be discharged under the current bankruptcy statute.
And what are the benefits of filing under chapter 7 of bankruptcy law?
- Any debt sum can be cleared absolutely, and you are 100 percent free of debts until you are discharged.
- In order to apply for it, there is also no minimum debt amount required.
- Creditors have no claim on you anymore. After the discharge, your wages and belongings purchased are your own and nobody, but you, has any claim over them.
- It’s very fast, you have a very good chance that in the next 4 to 6 months your claim will be discharged.
And what are the drawbacks?
- You could lose all your money.
- Not all debts can be exonerated.
- You will end up paying for your loans from your home loan co-signers (unless they seek similar protection)
- Only once every 6 years may you file under bankruptcy law chapter 7.
- Your credit rating would be destroyed (but there are ways to improve it). Furthermore, you can find it much more difficult to get a loan of some kind.
- If you are a young person, buying a home and starting a family with Chapter 7 around your neck would be very difficult for you, and if you are already married, you should know that divorce very frequently follows bankruptcy.