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Filing For Bankruptcy: An Overview Of What Is Chapter 7 Bankruptcy?

Chapter 7 bankruptcy is designed for debtors in financial difficulties that do not have the ability to pay their existing debts. Chapter 7 bankruptcy is often referred to as “no asset”. It is used for people who have minimal assets, including minimal equity in their home, but have significant debts. When you file for Chapter 7, which is also known as the liquidation, the Court will liquidate, or sell off, all your non-exempt property or assets to pay back your creditors. It means that you will be converting your assets into money to try and meet the requirements of your debts. 

Exempt assets are assets cannot be sold to satisfy your creditors. After your non-exempt assets are sold and the funds given to your creditors, all of your remaining debts are discharged (wiped out). Exemptions vary from state to state and are set values above which debtors must surrender property. States with higher exemptions are more attractive to debtors because it protects more of their property.

Exempt property or assets may include homes, vehicles, personal property, insurance policies, and retirement accounts. Check with a local attorney for exemptions in your area. Exemptions are protections for value you have in certain assets and these exemptions vary from State to State. Currently, the exemption laws of whatever State you live in when you file your bankruptcy case are the applicable exemptions. Exempt items include specified items, a certain amount of money dictated by the trustee, and some personal effects. Most debtors are able to keep property they need to get on with their lives.

Chapter 7 bankruptcy is the simplest and most popular way to a financial fresh start and eliminating debt, it is aim to discharge debts.

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Legal Research Law ArticleView all Bankruptcy and Debt Relief Articles     Legal Research Law FAQView Bankruptcy FAQ

Legal Research Law FAQView Chapter 13 Bankruptcy FAQ   Legal Research Law FAQView Chapter 7 Bankruptcy FAQ