The General Concepts Concerning Chapter Seven Bankruptcy

Written by Adam Peck Category: Nursing Homes January 23rd, 2013 3 min read

Within the Bankruptcy Code, chapter 7 is a bankruptcy procedure obtainable to both individuals and institutions on filing a petition and all needed declarations linked to the debtor’s assets and income. There are fees amounting to several hundreds of dollars associated with submitting the petition. Nonetheless, payment by installments can be set up, allowing the debtor to prolong payment up to 180 days. Chapter 7 is frequently, though not entirely, a voluntary option.

A precursor to filing a bankruptcy petition as an individual is credit counseling from a credit counseling agency that is operating with the appropriate approval. This counseling must have took place within just 180 days of filing the petition. In the event of the development of a plan to control the debt, this plan must be made available when filing the mandatory documentation with the court.

Chapter 7 can provide instant relief to the debtor by means of putting a stop for a time to any kind of actions on the part of the creditors to recoup debt. Additionally, filing a chapter 7 brings about assets being classed as exempt and nonexempt. All those categorised as exempt, including mortgaged property, will not be a part of the liquidation process under chapter 7 being secured by other creditors.

As chapter 7 allows the liquidation of assets as outlined by a prescribed hierarchy as a way to ensure the best return to unsecured creditors, filing a petition presupposes that the debtor will will give up control of estate assets not safeguarded by exemptions, including property. While most people can anticipate having a few or each of their debts discharged, a measure which usually enables them to continue their lives, this is simply not available for businesses involving partnerships or corporations. Of course, existing commitments that include mortgages on property cannot be discharged.

Under chapter 7, a bankruptcy trustee will be assigned to address the disposal of nonexempt assets so as to realize the claims of creditors. These nonexempt assets may perhaps be money or property which is free of liens and capable of being sold.

The bankruptcy trustee sets up a meeting among all the creditors identified by the debtor that the debtor can attend. At the meeting the debtor is going to be subjected to questioning from the creditors as well as the trustee. In the case of the creditors, the questions will more than likely pertain to financial concerns, such as debtor’s assets. The trustee, nevertheless, is going to be concerned to shed light on legal matters relevant to making a full disclosure for 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 decide on reaffirmation of a specific debt, before discharge. In this case, there is an arrangement made between the debtor and creditor to manage the debt that enables the debtor to retain possession to 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 get a discharge of some or all of their debts. Chapter 7 is ideal for dealing with consumer debt.

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Written by Adam Peck

Expertise: Personal Injury

Adam J. Peck, ESQ is a principal with Peck Law Group, APC. In 2008, Mr. Adam Peck received his Juris Doctorate from Whittier Law School where he graduated Cum Laude. His practice is primarily dedicated to representing Elders, Dependent Adults, along with their loved ones and family members, who have suffered horrific personal injuries.