Making Sense Of What Chapter Seven Bankruptcy Is – How Can You Apply?

December 15th, 2009

We have all heard of chapter 7 bankruptcy, although many of us if asked probably could not give a precise answer to what exactly it entails. Sadly many folks make dreadful errors in their bankruptcy filing because of this lack of explanation.

Having to go through the proceedings necessary in bankruptcy is the last thing people want to do. Naturally the idea of being in a situation where your debts are worth more than what you earn is not very popular, however regardless of this if you find yourself in this predicament, making sure you understand the process of Filing For Chapter seven Bankruptcy is 100% required.

There isn’t just one kind of bankruptcy proceeding, in fact there are a number including chapter 7 (the focus of this article) and Chapter 11.

The Definition Of Chapter 7 Bankruptcy: When somebody goes through the process of chapter 7 bankruptcy, according to United States of America law they are essentially liquidating all assets (that are not legally exempt from liquidation) so they can pay back their creditors.

Businesses/partnerships/corporations and individuals can apply for a chapter 7 bankruptcy. There is, however, a special clause open to the individual within the framework of this chapter filing that is not available to the other entities. That special clause is known as a “discharge”. What a discharge refers to is the freeing of the individual from certain debts.

The first things to do when getting involved in chapter 7 bankruptcy: On a baseline level, those filing for Chapter 7 must provide: proof of your full income as well as expenditures, proof of your existing liabilities and assets, statements for your financial affairs, copies of any expired executive contracts, and of course copies all your tax returns.

For individuals there are additional items that must be provided to the court as well. They will include but are not necessarily limited to the following: copies of your reports for credit counseling as well as any payment plan programs, statements of income/employee payments and in the case of being a student, copies of documents stating interest payments on one’s student loans. The information in this document is very brief and general, if you need to find out more about chapter 7 bankruptcy and others, a good place to start would be with the links in this article and also with the US courts website. However, remember filing for Chapter 7 protection by yourself is not advised, you should get professional help from a lawyer.

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