Chapter 7 Bankruptcy May be the Right Choice, Depending on the Circumstances
Brandon, FL (Law Firm Newswire) January 10 , 2013 - Every bankruptcy filed in the U.S. today is different.
“No two bankruptcy cases are alike, even though a debtor may think their friend or relative is in the same boat as they are,” said Reginald Osenton, a Brandon bankruptcy lawyer. “Often, although their situations may appear similar, there are significant differences that would mean each person needs to file under a different Chapter to declare bankruptcy.”
If they choose a Chapter 7 bankruptcy, often referred to as a liquidation or straight bankruptcy, a trustee is appointed to sell all non-exempt assets to pay creditors. The court-appointed trustee then distributes the funds according to priorities laid out in the bankruptcy code. Chapter 7 may only be filed if a debtor meets certain requirements.
Debtors may file Chapter 7 if they are not able to file Chapter 13. They must not have any other bankruptcy discharges in the past six to eight years.“If you are not certain whether you qualify, talk to a bankruptcy attorney and get more information before proceeding,” suggested Osenton.
Chapter 7 bankruptcies are not easy to deal with, as there is a mountain of paperwork and some very personal questions that need to be answered before moving forward. The debtor needs to explain where they live, the cost of living there, how much they make from their job, their debts, what property they feel is exempt, how much property is owned, their spending habits and anything else that is relevant to the Chapter 7 process. Once that has been sorted out, the process of filing is initiated.
When a debtor files for a Chapter 7 bankruptcy, an automatic stay is issued that holds off the vast majority of creditors. It prevents repossession, loss of welfare benefits, utility cut offs, wage garnishment and removal of funds from the debtor’s bank account. All property and debts are then placed under the care and control of the bankruptcy court and a trustee.
Once in bankruptcy proceedings, the debtor may not sell property, or give it away, or even pay their debts. They also may not enter into any other financial interactions without first obtaining the permission of the court. Even though the appointed trustee examines the property under bankruptcy protection, there is usually not much they can find that can be sold.
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