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What You Should Know About Chapter 7 Bankruptcy

The bankruptcy process can be difficult to understand, especially if you are new to a financially distressing situation. Choosing which form of bankruptcy is right for you and your loved ones can seem like an impossible choice if you dont have enough information. Despite past negative connotations for bankruptcy, this process is much more widely accepted because so many individuals and businesses are struggling in todays economy. Chapter 7 bankruptcy is one of the most common forms of bankruptcy, and it has saved many people from financial ruin. This form of bankruptcy might be right for your situation, but its best to educate yourself about it before you finally decide.

What You Should Know

When youre thinking about filing for bankruptcy, knowing as much about the process as you can will make the decision to file easier, because you will be able to confidently assert which form is right for you. Some important aspects of Chapter 7 bankruptcy that you can keep in mind include:

  • Its available for both businesses and individuals
  • It involves a means test, which tests an applicants need
  • It involves asset liquidation, where you sell your assets to creditors to pay back debts immediately
  • It is one of the most common forms of bankruptcy

This information about Chapter 7 gives people a basic understanding of the overall concept, but the best way to know as much as you can about any form of bankruptcy (especially the distinctions between different forms) is through a consultation with an experienced legal representative.

If you or a loved one is going through a very difficult financial situation and is thinking about filing for bankruptcy, discuss your situation with a compassionate and experienced bankruptcy attorney today, who can help you decide what your next steps should be.

Debts You Cannot Discharge During Bankruptcy

Chapter 7 bankruptcy is one of the most common forms of bankruptcy in the United States, because it can be applied to both individuals and to businesses. Many people choose Chapter 7 bankruptcy as their form of bankruptcy because it involves asset liquidation, which means selling your assets to pay off ones debts. Another aspect of Chapter 7 bankruptcy that makes it appealing for many is that oftentimes, when a person files for bankruptcy, his or her debts can be discharged, meaning that debtors will no longer be responsible for paying them back. While this is an attractive feature of Chapter 7 bankruptcy, its important to understand that not every debt is dischargeable.

Understanding the difference between debts that are dischargeable and debts that are not dischargeable is extremely important if a person is thinking of filing for bankruptcy, and is counting on debt discharge. While many debts are dischargeable, such as home mortgage loans and vehicle payments, some are not dischargeable, including:

  • * Student Loans
  • * Unpaid Taxes
  • * Tax Liens
  • * Debts owed to the U.S. Government
  • * Child Support Payments
  • * Alimony Payments
  • * Debts from Willful or Malicious Injury
  • * Debts from Intoxication Lawsuits

These debts are not dischargeable through Chapter 7 bankruptcy, so a debtor who files for Chapter 7 will still be financially responsible for these debts. The best way to know which debts will be discharged and which may not is to discuss your particular legal and financial circumstances with a legal representative as soon as you decide to file for Chapter 7 bankruptcy.

Chapter 7 bankruptcy comes with many benefits for debtors, which is why its one of the most popular forms of bankruptcy. If you are thinking of filing for Chapter 7 bankruptcy and want to know more about debt discharge, contact an experienced attorney today to discuss your situation.

Main Differences Between Chapter 7 Bankruptcy And Chapter 13 Bankruptcy

While any person facing large amounts of debt is likely to be experiencing similar emotions and facing similar problems as another person who is in a comparable situation, the best way to resolve the situation is not the same for everyone. However, it is important for anyone in this situation to realize that there is a way to reach financial solvency again and become debt-free. Depending on your unique situation, either Chapter 7 bankruptcy or Chapter 13 bankruptcy will likely be one of the best options for you. There are several differences between these two types of bankruptcy that will limit those who can apply for that type of bankruptcy or lead a person to choose one over the other. The main differences between these two types of bankruptcy are as follows:

  • Qualification Anyone can file for Chapter 13 bankruptcy, whereas Chapter 7 bankruptcy requires debtors to meet a few qualifications first. In order to file for Chapter 7 bankruptcy, a person must first and foremost pass the means test, proving that their income is low/insufficient enough to cover their debts, according to state standards.
  • How Debt Is Handled In Chapter 7 bankruptcy, a large portion of a persons debt is discharged or forgiven. What assets and possessions a person has that are not protected through exemption will be liquidate or sold off in order to pay off as much of their debts as possible before the remaining amount of eligible debts is discharged. In Chapter 13 bankruptcy on the other hand, a person will come up with a 3-5 year repayment plan, based on their income, that is geared to paying off most, if not all, of their debt. At the end of this repayment plan, it is possible that some of the remaining debt will be discharged, but this is not nearly as common as it is with Chapter 7 bankruptcy.

Determining whether you are eligible to file for a certain bankruptcy or which type is best for your situation can be extremely complex and frustrating.