What is Chapter 7 Bankruptcy?
Chapter 7 bankruptcy, also known as straight or liquidation bankruptcy, allows you to be relieve of some or all of your debts. A court-appointed trustee will sell off your assets and use those funds to pay back creditors what they can. Many who file for chapter 7 bankruptcy say that relief from overwhelming debt helps them regain control over their lives. If you want to know more about how a bankruptcy attorney can help you in your legal process.
In Chapter 7, the trustee reviews the documents to see if they have any assets to sell to pay their creditors. However, most of the basic things that people own can be protect from the trustee through the use of waivers. So in most Chapter 7 cases from individuals (not businesses), nothing is liquidating – they are cases without assets.
According to Chapter 7, What Can a Debtor Do with Secured Debts?
Under Chapter 7, the debtor must make decisions about his secured debts. Secured debts are those for which creditors have collateral. The security consists of the property that the creditor can recover if the debtor does not pay what he owes.
The 3 options for a Chapter 7 debtor regarding secured creditors are:
- Redeem: Pay the creditor the collateral value in a sum within about 2.5 months after filing for bankruptcy
- Reaffirm: Voluntarily sign a separate agreement in which they agree to continue customary loan payments during and after the case.
- Assign: Return the security to the creditor or allow the creditor to withdraw it, for example, repossession or foreclosure.
What Is the Role of a Bankruptcy Attorney?
Bankruptcy attorneys represent individuals and businesses who are struggling with debt. They help them navigate the bankruptcy process. They are helpful if you are involving in Chapter 7 or Chapter 13 bankruptcy. Bankruptcy can provide immediate relief from overwhelming debt, and it’s possible to emerge from the process. You can emerge more financially stable and with a clearer financial future than before your debts piled up.
However, you don’t want to go into the process without an experienced bankruptcy attorney by your side to make sure you file everything correctly. Pay all of your fees on time, and get the best outcome possible in terms of eliminating your debt.
The role of Bankruptcy Attorney can be very straightforward if you are representing an individual or business filing Chapter 7 bankruptcy, where the assets are liquidated and the debtors are discharged from liability.
However, if your client files Chapter 13 bankruptcy, their purpose is to reorganize their finances through repayment plans over three to five years, which is more complicated than liquidation.
The best way to ensure that your client has the best chances of success with their bankruptcy is to retain an experienced Bankruptcy Attorney.
When do I need to hire a Bankruptcy Attorney?
You need to hire a bankruptcy attorney when you file for Chapter 7 or 11 bankruptcy. A trained and experienced attorney will help guide you through the process. They can prevent you from making mistakes and ensure that your case proceeds as smoothly as possible.
It is important to note that bankruptcy attorneys, like all other legal professionals, work on a contingency basis. You pay them only if they are successful in discharging your debts; if they aren’t, then there’s no bill. The quality of attorneys can vary greatly, so be sure to use an experienced specialist—one who has a long track record of success with these types of cases.
Filing for Chapter 7 Bankruptcy
With Chapter 7 bankruptcy, your attorney appears in US bankruptcy court and requests a full discharge of all debt. However, in order to be successfully granted Chapter 7 bankruptcy protection, you must meet certain requirements as well as income requirements.
As required by law, if you file for Chapter 7, you should also attend credit counseling sessions to help prevent this situation in the future, and to help you rebuild your credit from the beginning.
Benefits of Filing for Chapter 7
This option can be ideal for clients who, no matter how hard they work, just fall further into debt and need a fresh start.
The purpose of Chapter 7 bankruptcy is to help debtors who have made mistakes start over and can dedicate their hard-earned income to living expenses, not large debts. You can benefit from representation for Chapter 7 bankruptcy if your debts have become overwhelming and unpayable.
Achieving Chapter 7 bankruptcy status allows individuals to dissolve their debt, which means they will be relieved of the obligation to pay money owed to creditors.
Although filing Chapter 7 means that the majority of your assets become the property of the bankruptcy estate, there are certain exceptions allowed that can protect you from the loss of your home, car, life and disability insurance, health or other benefits.
Another valuable Chapter 7 filing advantage: Your attorney can work to stop debt collectors harassing you and interfering with your daily life. If your wages are garnish, a bankruptcy judgment can make this stop too.
Business Assets:
You can also use bankruptcy exemptions to protect your personal and business assets. In this way you could continue operating the business after paying off the debts of your bankrupt business. However, if you are unable to protect all the assets of small business needs to continue operating. The Chapter 7 trustee will sell the nonexempt assets and properties, which could ruin your business.
If this is a corporation, or a limited liability company (LLC). Chapter 7 bankruptcy provides you with the means to shut down. It helps to liquidate your business in a transparent manner. When you apply for Chapter 7 on behalf of businesses, it is the trustee’s responsibility to sell the assets and pay to your creditors.
This leaves you free to do other things or look for work if you choose. Keep in mind that Chapter 7 is rarely a good idea for partnerships. In chapter 7 there is the possibility that trustee will try to settle debt by selling the partners’ personal assets.
Hope this article helps you to know how chapter 7 can protect you from your creditors. In case you are involve in Chapter 7 bankruptcy it is better to hire a bankruptcy attorney!
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