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Understanding Chapter 7 Bankruptcy

Understanding Chapter 7 Bankruptcy

Do you find yourself being able to keep current on your home and vehicles but simply cannot afford your credit cards, medical bills or other debt, then a Chapter 7 bankruptcy may be right for you. On the other hand, if you are at a place where you cannot afford any of your bills and simply want to erase all or most of your debt and start over, you may want to consider a Chapter 7.   

Under the U.S. Constitution, you have the ability to relieve all or part of your debts when you can no longer meet your obligations to creditors and lenders. Chapter 7 bankruptcy is the most common bankruptcy available to individuals. It allows debtors to discharge all or part of their debt and get a fresh start.  A Chapter 7 bankruptcy is very fast and typically takes 4 to 6 months to complete. Once it is over, your debts are discharged, which is another way of saying that your debts are legally forgiven.

Under a Chapter 7 bankruptcy, you can have all or part of your debts discharged after your liquid assests are used to repay some of the debt. This works by liquidating an individual debtor’s estate and the assets are distributed to creditors. The court appoints a trustee to oversee your case, and part pf the trustee’s job is to take ownership of your assets, sell them, then distribute to your creditors the money that’s been raised. Creditors must submit proper claims to receive payment.

The trustee can’t take all your assets. You’re permitted to keep certain “exempt property” so you’re not stripped of everything you need to live and you have a foothold to get a fresh start. Even after non-exempt assets are sold off, creditors rarely do receive all that you owe them. Most Chapter 7 bankruptcy estates don’t have enough left after accounting for the exempt property to pay everyone what they’re owed. The remainder of the debt owed will be discharged and you get to keep your exempt assets. Furthermore, neither creditors nor third-party collectors can attempt to collect these debts from you.

Since bankruptcy laws are so complex, it is advised to retain an attorney before filing bankruptcy. This is the best way to ensure your paperwork is filed completely and accurately. At Greg Baker, Attorneys at Law, PLLC, we offer a free consultation regarding whether Chapter 7 bankruptcy is the best option for you. Contact  our Pikeville Kentucky or Whitesburg Kentucky office today and start seeing the light at the end of your debt tunnel.