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We have all heard of chapter 7 bankruptcy, although many of us if asked probably could not give a precise answer to what exactly it entails. Every day people make mistakes when filing for bankruptcy that probably could have been avoided if they had better understood the different types of bankruptcy.
Having to go through the proceedings necessary in bankruptcy is the last thing people want to do. However if their debts add up to more than what they have coming in sometimes this is unavoidable.
There isn’t just one kind of bankruptcy proceeding, in fact there are a number including chapter 7 (the focus of this article) and Chapter 11. Chapter seven is more for individuals.
Chapter 7 bankruptcy explained
According to the law and the United States court system, Chapter 7 bankruptcy refers to liquidation of assets that are not legally exempt from liquidation in order to pay off creditors and debtors.
Chapter 7 is an option open to individuals, businesses, partnerships and corporations. There is, however, a special clause open to the individual within the framework of this chapter filing that is not available to the other entities.
The special clause for the public is called a discharge. What it basically means is that the public are able to free themselves totally from some of their debts.
How to get started filing chapter 7 bankruptcy
If you need to file for chapter 7 bankruptcy some of the things you will need are the following: proof of your full income as well as expenditures, proof of your existing liabilities and assets, statements for your financial affairs, copies of any expired executive contracts, and of course copies all your tax returns.
For individuals other additional documentation has to be supplied to the courts. As an individual you can expect to have to supply copies of statements of income and or employee payments, credit counseling reports etc, also students will need to supply documentation for interest payments on student loans.
If you are in a situation where filing chapter 7 bankruptcy or any other bankruptcy type is a necessity, make sure you take a visit to the US courts website. Also make sure that if you do need to take action in the way of a bankruptcy proceeding you get a good professional lawyer to deal with your case.
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