Chapter 7 Bankruptcy

Many of us never think about the ramifications that come from racking up bills by getting the houses we want to live in and the things we love to play with. Sometimes it is too late before we realize how much debt we have put ourselves in. Before we know it we are in so much debt that the creditors are constantly stalking us and we are forced to think about the most dreaded word …bankruptcy.

Bankruptcy helps both people and businesses, enabling them to do one of two things. It can take away all the debt that has been accrued or it can pay them back through the protection of the court of bankruptcy. Those who file for bankruptcy must go through the federal court. The court views bankruptcy as ‘liquidations’ and/or ‘reorganizations’.

When you file for Chapter 7 you may be able to sell property that you own in order to repay some of the debt. The government will remove all or most of the unsecured debt that you have accrued. Unsecured debt is debt that does not have any collateral pledged to it. If you have any property that is exempt because of federal and state laws then you will be able to keep that property. This usually includes cars, clothes, and any household items.
After filing – Chapter 7 bankruptcy can last around 3 to 6 months. Keep in mind that there are many rules and regulations that must be followed and obeyed to the letter when filing for any type of bankruptcy. The courts do not tolerate anyone who tries to cut corners or take things into their own hands after they have filed.

Another thing to remember is that your credit will greatly be affected. You may have started off with bad credit – but when you file for bankruptcy it is placed on your credit report and is not removed till about 5-10 years later. Many business and even employees frown at the site of the word ‘bankruptcy’ on a credit report.