Why do debtors file for Chapter Seven Bankruptcy
Written by ady on July 11, 2009 – 9:48 pm -If you have too much debts, the hardest decision could be filing for bankruptcy. Many defaulters choose to file Chapter 7 Bankruptcy. Chapter 7 is a ‘liquidation’ of all the non-exempt properties which would gives you a chance to repay all your debts. The process is fully supervised, and the authority will appoint a a person known as a trustee to get sales from all the non-exempt assets of the defaulter and appropriate the sales money to various creditors. Exemptions means that there are properties that the courts will not touch when chapter 7 bankruptcy is filed. It is true that chapter 7 tend to favor the debtors more and with the help of exemptions, you can have a chance to lower their personal liability and keep some personal belongings.
In this exemption the debtor keeps the property that he is allowed to keep. This list will be provided in the Federal Bankruptcy Code. The property shall be divided as exempt or non-exempt when the state trustee files a property exemption report. Take note that while the basic law may be the same, some exemptions may be different in other states.
Secured debts are first paid off but if the debt is unsecured, it can be possible that the creditors of unsecured debts may not get the full payment. The trustee is authorized to decide who gets the payment first, based on the law. In order to get bankruptcy chapter 7 exemptions, the debtor must file the case in the state where the debtor lived for at least 730 days before filing for this type of bankruptcy. Alternatively, the debtor may also file the case in a state where the debtor has spent most of the 180 period prior to the 2-year period.
Federal exemptions may also be provided including retirement benefits, death disability benefits, survivor’s benefits and miscellaneous. Although, keep in mind that these may not be available in all states.
Bankruptcy is probably the worst scenario, your credit score may take a major hit because of a filing of bankruptcy. Not only you will lose all your personal belongings and you need start all over again in your life. Always consider other options before you look at bankruptcy.
Unfortunately, if you are in the dired situation, then try to learn more about chapter 7 exemptions as it can help you reduce your personal loss of assets and make use of it in a way to help get back on your feet at the earliest.
Tags: bankruptcy
Posted in Bancruptcy |