In the world of finance in which we currently live, many individuals and businesses find themselves buried under excessive debt, unable to continue day-to-day operations. At this point, a bankruptcy proceeding may be the logical path. Bankruptcy law has several remedies, including Chapter 11 and Chapter 13 protections. However, if a debtor’s situation has become completely untenable, then it is time to consider Chapter 7, also known as “straight” or “complete” bankruptcy. It is currently the most common type of financial relief.
While chapters 11 and 13 govern the reorganization of finances of a business or individual, chapter 7 covers the liquidation of all assets necessary to meet a debtor’s financial obligations. For a business entity, this means effective dissolution. For an individual, certain assets may be exempt. This varies from state to state. Chapter 7 Murrieta attorneys can clarify this, depending on specific circumstances. Some types of debt may not be discharged, such as spousal support, child support, and even student loans. However there are currently 19 general classes of debt which are considered dischargeable under chapter 7.
There are several ways that a bankruptcy can be filed, including form templates available from the federal government, and even software programs which will walk the individual through an interview process, much like income tax preparation software. However, with the the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005, chapter 7 filings have become much more complex and a reliable, experienced bankruptcy firm can provide that margin of safety that can mean the difference between a successful filing and a BAPCPA challenge by a United States Trustee.
The Pros of filing Chapter 7 include the fact that it bars the IRS and state tax agencies from trying to collect any amounts owed them, it can temporarily halt foreclosure proceedings, most unsecured debts such as medical bills and credit cards will be eliminated. and any wage garnishments will be halted upon filing.
The Cons of this type of bankruptcy include the fact that it will stay on your financial record for ten years which means that potential lenders may either refuse you credit or may make credit more difficult to obtain.
