Chapter 7 Bankruptcy ? Here is how it works

If you are planning on filing for bankruptcy in the near future then chances are good that you will be filing for, or forced to file, under Chapter 7 bankruptcy. If you own a business that is filing for Chapter 7 this means that your company will have a Trustee appointed by the court and operations will cease.

The trustee will sell the business assets and use the money to pay off the company?s debts. Sometimes this means that a lot of people will lose their jobs, but not always. At times the company can be left partially intact and continue running business as normal but with someone else running things.

But Chapter 7 bankruptcy is also available to be filed by individuals, not just businesses. When an individual files for Chapter 7 there will be a list of property made that can be used to pay off the debt and a list of property that is exempt from being sold. Some debts may not be eligible to be handled under a Chapter 7 bankruptcy, like real estate mortgages, and will be kept intact.

After the bankruptcy is filed the trustee will sell all non-exempt property and all the proceeds will be used to pay back creditors. Although the bankruptcy will manage to resolve most of your unsecured debts there are certain debts that. This list of remaining debts will include things like child support, tax debt, student loans, and any fine or restitution you may have been assigned in criminal courts.

While filing bankruptcy does give you a chance to start over again and rebuild your financial history, there are also consequences you need to consider. One of the consequences is that most of your valuable possessions will have been sold, so you will have to save up and buy replacements. This process may be extremely difficult for you to swallow, but will open up opportunities for better money management in the future.

The biggest consequence is that it will reflect the bankruptcy on your credit report for a full 10 years. This means that you may not be able to get any other loans or new credit, but this could also happen with a lot of debt so it might be worth the hassle for awhile to start over.

There are a lot of things that you need to consider before filing Chapter 7 bankruptcy. If you are being forced to file then you might have the option of avoiding this for the reason that it might be abusive to force you to file under Chapter 7. Maybe a Chapter 13 would work better for your financial situation. Make sure that you understand what the differences are and make the decision that is right for you.

Source: http://traduke.com/chapter-7-bankruptcy-here-is-how-it-works/

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