What is Chapter Seven Bankruptcy?
Informally called "straight bankruptcy," Chapter 7 is a liquidation bankruptcy proceeding. In Chapter 7 the debtor files a petition for bankruptcy and an “automatic stay” takes effect on most collection activity, prohibiting creditors and debt collectors from contacting you or filing a lawsuit against you. The debtor turns over all non-exempt property (assets) to the bankruptcy trustee who then converts it to cash for distribution among the creditors. At the end of the proceeding the debtor receives a discharge of indebtedness (discharge notice) for all dischargeable debts (such as credit care bills, medial bills, loans, certain lawsuit judgments, and certain taxes) releasing him or her from personal liability for those debts. I would be happy to provide you with a free consultation. Visit us online at www.roundrockbankruptcylawyers.com
Prior to the filing of a Chapter 7 bankruptcy, a debtor should gather together all of his financial records in order to fill out the bankruptcy petition, schedules, statement of financial affairs and other documents.
| Bankruptcy is a legal proceeding in which a person can get a fresh start solutions. Bankruptcy can be very useful and effective in resolving financial problems in certain cases. |
There are two basic types of bankruptcy for individuals : Chapter 7 Bankruptcy and Chapter 13 Bankruptcy. A filing under Chapter 7 Bankruptcy is often called liquidation or a straight bankruptcy. Liquidation converts one’s assets to money, if there are any. This process involves the appointment of a trustee. A trustee collects any non-exempt property, sells the assets and then distributes the proceeds from the sale to the appropriate creditors. However, unlike other bankruptcy filings, a debtor does not make payments to the trustee. Does this mean that you will lose your assets? NO! The answer depends on your particular situation, but in almost all bankruptcy cases you will not lose any of your belongings. The business’ or consumers nonexempt property is sold and the proceeds are to be used to pay off creditors. The State of Colorado provides a list of exemptions (property which is yours to keep). Generally described as “liquidation bankruptcy”, under Chapter 7, a consumer or business
