Chapter 7 bankruptcy is a popular type of bankruptcy because it allows the consumer to discharge most of their debts at its conclusion.Article:
Chapter 7 bankruptcy is one of the primary options for those who are seeking bankruptcy protection. Not only is it a primary option but it is often the most popular option since it does not technically require an eventual repayment of unsecured debts. Under the other main option for bankruptcy filers: Chapter 13 requires repayment under a restructured plan as long as the person filing bankruptcy is a wage earner.
So how does Chapter 7 bankruptcy work and why is it so popular? Here are a few points of interest on the subject:
• Chapter 7 bankruptcy requires the liquidation of nonexempt assets for the benefit of the debtor’s creditors
• You could list most or all of your assets as exempt depending on your state’s regulations regarding Chapter 7 bankruptcy exemptions
• At the conclusion of liquidation, most of your unpaid debts are discharged which means you are no longer legally obligated to pay them off
• Certain debts such as alimony, child support, student loans, etc. are not dischargeable and still must be paid off even after the bankruptcy has run its course
Chapter 7 Bankruptcy Legally Defined
The federal government realizes that most consumers would rather file Chapter 7 bankruptcy than any other kind and have taken measures to prevent this. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 imposed stricter requirements of Chapter 7 cases by imposing a “means test” on applicants. Despite all that, Chapter 7 bankruptcy filings are on the rise and still greatly outnumber Chapter 13 cases.If you are worried that bankruptcy might be in your future then it is in your best interest to pursue Chapter 7 bankruptcy. If eligible, you could be able to discharge the majority of your debts while still keeping your exempt assets. Talk to a bankruptcy attorney today to learn more about Chapter 7 bankruptcy and how it is defined as a legal term.
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