CHAPTER 7
Chapter 7 bankruptcy or "straight bankruptcy" is the most popular form
of bankruptcy because it allows the debtor to "wipe the slate clean"
and start all over. This code is available to individuals, couples,
corporations and partnerships. Discharge normally occurs within 4-6
months after filing.
Non-exempt assets will go under the care of a trustee who
liquidates them to satisfy creditors in order of their secured
interests. Any wages a debtor earns is off limits to creditors who had
a vested interest on the date of filing.
This code is generally used by those who lack sufficient income to
cover outstanding debts after taking care of basic necessities, and who
have no hope of ever repaying their creditors. There are certain
obligations that are not dischargeable, for example:
Alimony and child support
Back taxes under 3 years old and student loans
Recently made purchases for substantial amounts
Property executed contracts involving titles or liens
example: houses and cars
Before
considering chapter 7 you should take an inventory of the types of debt
owed. This will give you a better idea if filing will give you the
relief you seek.
Who should consider chapter 7.
If there is no hope of repaying any of your debts.
If court action by creditors is imminent, filing stays all collection proceeding while in court.
Downside
Ruins your credit. If you have a cosigner, they will still be responsible for the debt you discharge