Chapter 7, Bankruptcy Law

Posted by Audus Zinkman

May 11, 2010

Under the Bankruptcy Code, chapter 7 is a bankruptcy plan available to both people and businesses on filing a petition and all mandatory declarations linked to the debtor’s assets and income. You will discover fees amounting to some hundreds of dollars that comes with submitting the petition. Nonetheless, payment by way of installments can be negotiated, granting the debtor to prolong payment as long as 180 days. Chapter 7 is generally, though not just, a voluntary option.

A precursor to filing a bankruptcy petition as an individual is credit counseling at a credit counseling agency specifically operating with the appropriate authorization. This counseling must have happened within just 180 days of filing the petition. In the scenario that there is a creation of a plan to manage the debt, this plan must be presented when filing the necessary paperwork with the court.

Chapter 7 provides instant relief for the debtor through putting a stop for a time to any kind of measures on the part of the creditors to recover the debt. To add, filing a chapter 7 leads to assets being categorised as exempt and nonexempt. All those categorised as exempt, such as mortgaged property, are not part of the liquidation process under chapter 7 being secured by other creditors.

As chapter 7 allows for the liquidation of assets as outlined by a prescribed hierarchy so as to be sure the best return to unsecured creditors, filing a petition presupposes that this debtor will will give up control of estate assets not guarded by exemptions, including property. While people can anticipate having some or all their debts discharged, a measure which lets them continue their lives, this isn’t available for businesses involving partnerships or corporations. As expected, existing commitments which includes mortgages on property are not able to be discharged.

Under chapter 7, a bankruptcy trustee is going to be assigned to deal with the disposal of nonexempt assets in order to recognize the claims of creditors. These nonexempt assets could possibly be money or property that is free of liens and capable of being sold.

The bankruptcy trustee organizes a meeting with the creditors identified by the debtor that the debtor can attend. At the meeting the debtor will be put through questioning from the creditors along with the trustee. In the case of the creditors, the questions will likely pertain to financial concerns, including the debtor’s assets. The trustee, nevertheless, is going to be concerned to clarify legal matters relevant to making a full disclosure to the court to be able to facilitate the discharge of debts.

If proof could be offered to the court that the debtor has sufficient income, the debtor may opt for reaffirmation of a specific debt, before discharge. In cases like this, there is an arrangement made between the debtor and creditor to deal with the debt that enables the debtor to retain possession to the property and restructure payments.

Also, in the case of individual debtors, assuming there is no failure to disclose information or mislead the court, the majority of debtors can expect to get a discharge of some or all of their debts. Chapter 7 is ideal for dealing with consumer debt.

Audus Zinkman is an expert on San Antonio Bankruptcy. He has worked in the legal field for over ten years. His main focus is on San Antonio Chapter 13, Chapter 7, Chapter 12, Chapter 11, foreclosure defense, and credit card defense.

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