If you are considering filing for Chapter 7 bankruptcy then you should carefully go through its negative and positive aspects. Knowing the benefits and pitfalls of Chapter 7 bankruptcy will help you to take the right decision about filing for it. Chapter 7 bankruptcy has any advantages and it really works good for those who have heavy burden of debts and cannot pay off their debts. However, the pitfalls of Chapter 7 bankruptcy far outweigh its benefits. This is the pint where you have to think again whether filing for Chapter 7 bankruptcy is good for you or not. In this situation you can think about filing for other types of bankruptcy.

Advantages of Chapter 7 Bankruptcy

If you are having heaps of debts and you are financially unstable to pay off all those debts then Chapter 7 bankruptcy is the right option for you. You can file for it and can take a fresh start with your finances. All your debts that are eligible will be eliminated and you will no longer be obligated to pay off debts to creditors. Chapter 7 bankruptcy also has the advantage that there is no limit on the amount of debts that can be cleared by it. However, you should bear in mind that not all types of debts are eligible for chapter 7 bankruptcy. Another advantage of Chapter 7 bankruptcy is that the entire process of filing for it takes only 6 months (maximum in most cases).

Pitfalls of Chapter 7 Bankruptcy

Chapter 7 bankruptcy has many pitfalls that devalue the advantages it gives to the consumer. Consumer has to lose any of their important assets if they have any. The court may force you to sell your car or home when you file for chapter 7 bankruptcy. If there are any current debts then the monies that you have gained will be merged in those debts. To file for chapter 7 bankruptcy, you have to prove your eligibility for it. If you don’t qualify for it you cannot file for it. Read the full story

Finding yourself in a stringent financial situation can be really nerve stretching. This situation can become scarier with bankruptcy especially when you are unaware of it. Many debtors don’t get the details of bankruptcy while filing for it because this is a shameful thing for them. Before filing for bankruptcy, you should have a proper knowledge and information about what bankruptcy is.

United State Federal Court System

In United States, the federal court system deals with all types of bankruptcy laws and regulations. It also provides complete information about bankruptcy process. But it doesn’t mean that go to Washington to file for bankruptcy. That’s because each country deals this matter with businesses and individuals during the process. The federal bankruptcy laws on state information are actually helpful to give financially disturbed individuals a new and fresh start.

What you should know about bankruptcy?

One of the most exigent things while filing for bankruptcy is to have it keep in mind that courts do not belong to any individual or business to file individual or business case to the court. The simple method is to filing the petition that is actually the declaration of intent. That means the debtor is allowing the judicial system and have enough knowledge that he is filing for bankruptcy.

Declaring the intent doesn’t always mean that the entire process of bankruptcy will go through a legal path. Debtors are required to submit forms containing complete information about the bankruptcy that they are filing for. Court review debtor’s credit history, list of creditors and the existing amount of debts by the forms provided by the debtors. Courts also review the existing and previous activity of the debtors. After reviewing all these information, federal court will make decision about whether a debtor should continue a trial or not.

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If you think that you no longer have the ability to repay your loans and debts, then you can declare a personal bankruptcy. The U.S constitution has brought about two major types of personal bankruptcy, Chapter 7 and Chapter 13 bankruptcy. Let’s take a brief look at each of these and understand how they could relate to your situation.

What Are Liquid Assets?

Before we dig into the Chapter 7 bankruptcy, which deals with liquid assets, you need to understand what exactly liquid assets are.  Current accounts, savings accounts, and any other property that can be converted to cash is known as liquid assets. When you declare bankruptcy the cash is extracted from these liquid assets and that is paid to the creditors. It is the state laws that decides which asset of yours would be a liquid asset and which would be a non-exempt asset (assets that cannot be used to repay creditors).

What Is Chapter 7 Bankruptcy?

According to the Chapter 7 bankruptcy, your liquid assets would be utilized to have either all or part of your debts to be paid off. This means that you would have to go through a court process where all your properties and assets would be divided into the two categories of liquid and non-exempt.  Whatever is liquid asset will be used for implementing the rules of Chapter 7 bankruptcy.

Are You Eligible for Chapter 7 Bankruptcy?

Declaring bankruptcy doesn’t mean you simply go and say, “Ok, I give up. I’m bankrupt” and expect the court to solve the matter for you. Read the full story