Chapter 7 Personal Bankruptcy Overview

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Chapter 7 Personal Bankruptcy Overview

No doubt if you are encountering financial hardship and your debt is just rising by the month, you must have comtemplated filing for bankruptcy protection. The most “popular” alternative is to file for Chapter 7 bankruptcy. Chapter 7 bankruptcy is named such bacause it is chapter 7 under the bankruptcy law. Chapter 7 bankruptcy is also known as the liquidation bankruptcy. It is also named liquidation bankruptcy because your assets can be repossessed and sold off to satisfy the debt obligation to the creditors. So what exactly is involved with filing Chapter 7 bankruptcy?

Hire a bankruptcy lawyer to represent you

Since bankruptcy is so complex, it should not be taken lightly. Bankruptcy is not an everyday event and therefore should be handled with care and should be left up to the certified bankruptcy lawyer. Filing for bankruptcy yourself is doable especially with the help of software assisted bankruptcy like But do you want to take the chance and miss filing something crucial? What if you forget to include one asset in your filing and ended up losing it to the creditors in the process? Instead of jeopardizing your bankruptcy filing, a bankruptcy attorney can help you keep your assets and help you get a fresh start in life.

Obtain credit counseling

The bankruptcy law has required you to attend credit counseling classes if you were to file for bankruptcy. Many state approved credit counseling outfits have classroom training or online sessions. Bankruptcy law setup this credit counseling requirement to educate the consumers on the importance of money management so as not to fall into any financial difficulty at any time. The credit counseling as mandated by the bankruptcy law, is comprised of 2 sessions, which should be taken in the pre-bankruptcy and the post bankruptcy phase. It is the intention of the bankruptcy law that through the education of the credit counseling course, you will never have to face bankruptcy since you are now better informed of the importance of money management.

File bankruptcy petition

The bankruptcy process officially begins with you apply your petition with the bankruptcy court of the state that you are in. The petition has a lot of bankruptcy specific forms and supporting documents such as tax return, pay stubs, bank statements, credit card statements and more.

Be granted automatic stay

Your creditors will be notified of your intention for default once you have filed your petition with the bankruptcy court. Automatic stay is given to a bankruptcy filer once the petition is filed. With automatic stay, the creditors will have to cease all pending lawsuits or collection efforts against you.

Attend 341 meeting

Meeting with the creditors is another name for 341 meeting. In this meeting, the attendees includes the filer, a bankruptcy trustee, and creditors if they choose to attend. The purpose of the 341 meeting is to verify the bankruptcy petition that has been presented to the bankruptcy court. The bankruptcy trustee will ask you questions to check the validity and accuracy of your bankruptcy documents. The creditors you have listed in your bankruptcy petition do not have appear in the 341 meeting. If the creditor objects to the debt being discharge, the creditor can submit in writing to the bankruptcy court.

Receive your final bankruptcy discharge

This is the last stage of your Chapter 7 bankruptcy process. If and when you receive your bankruptcy discharge paperwork, it means that you have successfully completed the bankruptcy petition. In the case of your unsecured debt, the bankruptcy discharge papers effectively eliminated the debt, and the creditors cannot pursue you in the future for the repayment. In the case of secured debt, the bankruptcy discharge may or may not eliminate this debt because it all depends if the underlying assets are exempt or not.

In summary, filing for bankruptcy is not an easy task. Chapter 7 bankruptcy is not something that you can just pick up along the way, it requires a lot of knowledge to achieve a successful filing. Since it is so complicated and involved, you definitely need a certified bankruptcy lawyer to assist you with the entire process through and through. Just like you would not go to a family doctor for your eyesight issue, you should not attempt to file for bankruptcy by yourself. Bankruptcy is not something you should just try and see if you can get it to work.

Steve Sanchez has recently overcome the economic depression of 2008-2009 by declaring bankruptcy.  Even though bankruptcy has devastated Steve financially and emotionally, Steve has rebuilt his businesses in the last 6 months and he has not looked back since.One of his project is to educate people on bankruptcy.  Having gone through the ordeal himself, he has first hand knowledge of the pros and cons of filing for bankruptcy protection.  Please visit his site if you want additional information regarding bankruptcy.
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