Chapter 7 bankruptcy is a legal procedure where a person who has no assets or income is able to get rid of their debts through liquidation. This type of bankruptcy is usually filed by individuals who owe less than $1 million dollars.
The U.S. Bankruptcy Code was enacted in 1978 to provide relief from financial distress for individual consumers, businesses, and governmental units. In general, Chapter 7 bankruptcy allows debtors to discharge certain types of unsecured debt (debts owed to creditors who don’t qualify for protection under other chapters of the code).
If you are struggling to pay off credit card bills, medical bills, or student loans, you should consider filing for Chapter 7 bankruptcy. The process may seem overwhelming at first, but it is not nearly as difficult as many people make it out to be.
Chapter 7 bankruptcy is often called “straight bankruptcy” because it discharges all of your debts. However, there are some exceptions:
* Certain taxes that have been unpaid for more than three years can also be discharged.
* If you were convicted of fraud, embezzlement, or larceny within the last seven years, any restitution payments made will be considered part of your total debts.
* Certain child support obligations are not discharged if they are owed to a state agency.
* Certain fines and penalties related to criminal activity are not discharged.
Chapter 7 bankruptcy does not affect your property rights. You keep everything you own and do not lose your home, car, or anything else. Your only obligation is to repay what you owe.
You must complete the entire bankruptcy process in six months. After this time period, you cannot file another bankruptcy petition.
You can file either an Individual Voluntary Petition (IVP) or a Joint Voluntary Petition (JVP). IVPs are used for single-person bankruptcies; JVPs are used for joint bankruptcies.
In order to file a Chapter 7 bankruptcy case, you need to hire a lawyer. A bankruptcy attorney will help you determine whether you qualify for Chapter 7 bankruptcy and how to best go about getting started with the process.