Within the Bankruptcy Code, chapter 7, is a bankruptcy plan obtainable to both people and companies for filing a petition and all required declarations in connection with the debtor's assets and income. You will discover expenses amounting to some hundreds of dollars associated with filing the petition. Nonetheless, payment by way of installments can be set up, granting the debtor to extend payment up to 180 days. Chapter 7 is usually, though not just, a voluntary option.
A precursor to filing a bankruptcy petition for an individual is credit counseling by a credit counseling agency specifically operating with the proper approval. This counseling must have occurred within 180 days of submitting the petition. In the event of the development of a plan to deal with the debt, this plan must be presented when filing the mandatory paperwork with the court.
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Chapter 7 can provide immediate relief for the debtor through putting a stop for a time to all actions on the part of the creditors to recuperate the debt. Furthermore, filing a chapter 7 causes assets being classed as exempt and nonexempt. All those categorized as exempt, such as mortgaged property, aren't part of the liquidation process under chapter 7 being secured by other creditors.
As chapter 7 provides the liquidation of assets based on a prescribed hierarchy so as to make certain the best return to unsecured creditors, filing a petition presupposes that the debtor will will give up control of estate assets not guarded by exemptions, including property. While individuals can anticipate having a few or all their debts discharged, a measure which usually permits them to continue their lives, this is not available for businesses involving partnerships or corporations. Naturally, existing commitments for example mortgages on property cannot be discharged.
Under chapter 7, a bankruptcy trustee is to be assigned to address the disposal of nonexempt assets so as to see the claims of creditors. These nonexempt assets might be money or property that is free of liens and able to be sold.
The bankruptcy trustee puts together a meeting among all the creditors recognized by the debtor that the debtor is obliged to be present. At the meeting the debtor will be put through questioning from the creditors along with the trustee. In the case of the creditors, the questions will more than likely pertain to financial concerns, including the debtor's assets. The trustee, nevertheless, is going to be concerned to clarify legal matters relevant to creating a full disclosure to the court in order to facilitate the discharge of debts.
If proof could be offered to the court that the debtor has enough income, the debtor may opt for reaffirmation of a specific debt, before discharge. In this instance, there is an arrangement made between the debtor and creditor to handle the debt that allows the debtor to retain possession on the property and restructure payments.
Also, in the case of individual debtors, assuming there is no failure to disclose information or mislead the court, the majority of debtors can expect to receive a discharge of some or all of their debts. Chapter 7 is suitable for dealing with consumer debt.
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