Chapter 7 bankruptcy is known as liquidation bankruptcy. It doesn’t involve repayment plans, so you won’t need to worry about a large amount of your income going out each month in a payment plan. Instead, this kind of bankruptcy allows a bankruptcy trustee to collect and sell your assets to pay back the debts you owe. After this is done and your funds are exhausted, the rest of the debts are forgiven, although there are a few exceptions.
Chapter 7 eligibility is what makes it one of the most common kinds of bankruptcy. You can be an individual, partner, corporation or business when you file. Unlike other kinds of bankruptcies that limit who can file, most people can file for this bankruptcy.
To file, you must go through credit counseling first. This is done in part to help you understand what bankruptcy means to your finances as well as helping you understand how to avoid bankruptcy in the future.
With a Chapter 7 bankruptcy, the end goal is to give you a fresh start. That means that you won’t have any liability for debts that the court allow to be discharged. The right to adischarge of a debt isn’t guaranteed, so this is something to consider when you file. Some kinds of debts, like tax debts and student loans, may be difficult to discharge or impossible to eliminate through bankruptcy.
Considering all the options, bankruptcy can give you a fresh financial future. There are a few types from which to choose, so it’s worth getting guidance from a New York attorney with experience in bankruptcy filings before you choose to file.
Source: US Courts, “Liquidation Under the Bankruptcy Code” accessed Feb. 26, 2015by