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FILING BANKRUPTCY CHAPTER 7
This page is all about bankruptcy chapter 7
(liquidation bankruptcy), starting with the onset of filing chapter 7
bankruptcy, the appointment of chapter 7 trustee, to the liquidation
and distribution of assets. This page also provides links to general
bankruptcy information,
chapter 11
bankruptcy, as well as chapter 13
bankruptcy.
Bankruptcy chapter 7 (also known as
"straight" bankruptcy) deals mainly with liquidation.
Under bankruptcy chapter 7, the company stops all operations and goes
completely out of business. Bankruptcy chapter 7 cancels most of your
debts, involving the complete liquidation of a debtor's property,
with the proceeds used to pay off the debts. Liquidation involves
the appointment of a bankruptcy chapter 7 trustee who collects the non-exempt property of
the debtor, sells it and distributes the proceeds to the creditors.
However, the debtor can retain certain property that is specifically
"exempt" under his choice of Federal law or her State's
law, such as tools of one's trade, limited equity in a car and
house, and some personal effects.
Here are the most common reasons for filing
chapter 7 bankruptcy.
How do I file bankruptcy
chapter 7 ?
First of all you must file the following forms:
These forms must
contain a list of all of your assets, all of your debts, as well as
some recent financial history. This is the most important and most
time consuming part of a bankruptcy filing. It is important that every creditor is listed in the schedules with
an accurate mailing address. You must list all of your debts, even
if it is a
non
dischargeable debt or if
you intend to reaffirm the debt.
The schedules also list your property, any debts secured by that
property, and the sale value of the property. "Property" here means
"assets" or "possessions", not just real estate. More on property in
bankruptcy. Your choice of exemptions is made on one of the
schedules.
The schedules are signed by the debtor under penalty of perjury.
The schedules are filed with the bankruptcy clerk in the district in
which you live, or have lived for the greater part of the last 180
days.
For most purposes the rights of the debtor and the creditors are
those that exist on the day the case is filed. All of the
proceedings in bankruptcy after the filing relate to the situation
as it was on the day the case was filed.
Top
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debts you forget to list in your bankruptcy papers,
unless the creditor learns of your bankruptcy case
-
child support and alimony
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debts for personal injury or death caused by your
intoxicated driving
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student loans, unless it would be an undue hardship
for you to repay
-
fines and penalties
imposed for violating the law, such as traffic tickets and criminal
restitution, and
-
recent income tax debts and all other tax debts.
In addition, the following debts may be declared nondischargeable by
a bankruptcy judge in
bankruptcy chapter 7 if the creditor challenges your
request to discharge them. They are however dischargeable in
chapter
13 bankruptcy, since you can include them in your reorganization plan, and at
the end of your case, the balance is wiped out:
- debts you incurred on the basis of fraud, such as lying on a
credit application
- credit purchases of $1,150 or more for luxury goods or
services made within 60 days of filing
- loans or cash advances of $1,150 or more taken within 60 days
of filing
- debts from willful or malicious injury to another person or
another person's property
- debts from embezzlement, larceny or breach of trust, and
- debts you owe under a divorce decree or settlement unless
after bankruptcy you would still not be able to afford to pay them
or the benefit you'd receive by the discharge outweighs any
detriment to your ex-spouse (who would have to pay them if you
discharge them in bankruptcy).
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