A law that provides for the development of a plan that allows a debtor, who is unable to pay his creditors, to resolve his debts through the division of his assets among his creditors is called Bankruptcy. This supervised division also allows the interests of all creditors to be treated with some measure of equality. Certain bankruptcy proceedings allow a debtor to stay in business and use revenue generated to resolve his or her debts.
The new bankruptcy law is now in effect, the landscape has changed for those who are considering bankruptcy. All debtors will have to get credit counseling before they can file a bankruptcy case and additional counseling on budgeting and debt management before their debts can be wiped out. Some filers with higher incomes won't be allowed to use Chapter 7.
What is chapter 7 of the Bankruptcy Law?
The most frequently used bankruptcy law is the Chapter 7, often called the Liquidation Bankruptcy. It involves the complete liquidation of a debtor's property, with the proceeds used to pay off the debts. Someone who considers bankruptcy is unaware of the nuances of bankruptcy or certain creditors' rights in bankruptcy. Be familiar with all the applications for filling. This article will provide you with broad guidelines so that you may be comfortable with your decision. I will begin with an outline of basic procedures in Chapter 7 case and conclude with a discussion of various Chapter 7 pitfalls.
7 Basic procedures involved in filing for a chapter 7:
1. You will be required to file a sworn upon filing, this includes a schedule of assets and liabilities, a list of exempt property, a schedule of current income and expenditures, a statement of your financial affairs and a statement of intent regarding consumer debts secured by property of the estate. You will surrender all your property state to the trustee. What this means, among other things, is that an automatic stay is triggered, prohibiting creditors from pursuing you or your property outside of the bankruptcy proceeding.
2. The clerk of court will give notice of the bankruptcy to your creditors.
3. Meeting of creditors will be held to question you about your debts and ability to pay. You will be attending the meeting whether you like it or not. The judge may not question you at this time. Other creditors and the trustee may question you. Unlike a trial, your attorney may not "object" to questions in a formal sense. It is an open opportunity for creditors to question you and you are required to respond in good faith.
4. A creditor of the trustee assigned to your case may object to your listed exemptions within 30 days after the meeting of creditors.
5. After the first date set for the meeting of creditors, A creditor must file a proof of claim within 90 days. If a surplus remains after all of the claims are paid in full at the end of the case, the court may grant an extension of time for filing of claims not filed during the initial 90 day period.
6. An objection to your receiving a general discharge of all of your debts must be filed by the trustee or a creditor within 60 days following the first date set for the creditors meeting If no objections are filed, and if no motion to dismiss is pending, the court will ordinarily grant a discharge upon expiration of the 60 day period.
7. A creditor may object to the discharge ability of a particular debt at any time if the debt if it:
* Is for a tax or customs duty
* Is not listed in the schedules so that a creditor could file a proof of claim
* Is related to alimony or child support
* Is a government fine or penalty; or is a government insured student loan.
A creditor may object to the discharge ability of a particular debt only within 60 days of the first date set for the meeting of creditors, if the debt is a consumer debt created close to filing or is a result of fraud or is a result of a wilful and malicious injury to a person or property of another.
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Dean Shainin offers online tips and debt advice. For more information, articles, news, tools and valuable resources on bankruptcy and debt solutions, visit this site: Bankruptcy Chapter 7
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