For many people, bankruptcy is a scary word. While nobody wants to declare it, too few people realize that bankruptcy is a form of protection from debt and is intended to help pay off debts. However, it’s important to understand what bankruptcy is and, more importantly, what each individual chapter represents.
In today’s post, Groce & DeArmon, P.C. provides you with a beginner’s guide to Chapter 7 bankruptcy.
What Is Chapter 7 Bankruptcy?
The biggest focus of this chapter is liquidation. For debtors, that means the sale of any nonexempt property, which is then distributed to the creditors you owe. The first thing you should understand about Chapter 7 bankruptcy is that there are other options, and it shouldn’t be the first chapter you consider.
One alternative is Chapter 13 bankruptcy, which we’ll talk about next week. The goal should be to not forfeit property or assets, but that sometimes becomes unavoidable.
How Does Chapter 7 Work?
As with all bankruptcy cases, the process begins with filing. The debtor will put in a petition with the court. This filing process includes schedules of assets, liabilities, income, spending and a complete overview of your financial dealings. Before filing schedules for exempt property, debtors must pay court fees up front or in installments. These fees typically total over $300.
Within a few weeks or months filing for Chapter 7 bankruptcy, the debtor will sit down with a trustee and creditors to go over financial dealings and property.
Am I Eligible For Chapter 7?
There are several different eligibility requirements to file for Chapter 7 bankruptcy. To start, Chapter 7 bankruptcy is available for individuals, partnerships, and business entities. Another major requirement for Chapter 7 filings is credit counseling. All filers must have gone through credit counseling from a sanctioned agency within 180 days of filing.
Aside from eligibility, the biggest thing to remember before filing for Chapter 7 bankruptcy is that filing a petition may result in the loss of property. As we’ve said before, this might be necessary, but debtors should seek alternatives before opening themselves up to this possibility.
Contact Groce & DeArmon, P.C. For More Information
Debt is a scary thing to deal with, and while bankruptcy might seem just as scary, it is meant to help relieve your debt. Chapter 7 bankruptcy is one way to potentially relieve debt and potentially be discharged from personal liability. At Groce & DeArmon, we specialize in Chapter 7 and would like to help you find a solution.
Give us a call today at (417) 862-3706 or contact us online for more information.