Chapter 7 Bankruptcy

Chapter 7 bankruptcy, often referred to as liquidation, is usually filed for by individuals or spouses. When an individual files for Chapter 7 bankruptcy, his or her attorney or the court may collect any non-exempt assets and liquidate them. Non-exempt assets are considered unnecessary day-to-day items, and may include items such as trailers or boats.  Exempt assets are considered necessary items, and may include items such as cars, homes, household furniture, jewelry, pensions, unpaid/earned wages, and items of clothing. Specific items which may qualify for exemption will vary depending upon the specific situation.

After assets are liquidated, the court or the debtor's attorney may distribute the proceeds to creditors. By doing this, debt is essentially eliminated, or discharged. As a result, the debtor no longer has any obligation to prior creditors. If an individual does not have any assets to liquidate, and he/she files for Chapter 7 bankruptcy, debt is normally discharged within a few months.   

It may cost approximately $299 to file for Chapter 7 Bankruptcy, depending upon the specific circumstances, and the filing process may take about 4-6 months to complete. After an individual receives his/her bankruptcy discharge by the court, he/she no longer owes his/her creditors. After filing for bankruptcy, a person may have some credit related problems which may take several years to fix. A Chapter 7 Bankruptcy may decrease an individual's eligibility or increase interest rates for mortgage loans, credit cards, car loans, and bank loans. 

To find a Chapter 7 bankruptcy attorney in your area, click here.