| Liquidation
(Chapter 7) w/ Trustee
Liquidation bankruptcy is called
Chapter 7, and it can be filed by individuals (a "consumer"
Chapter 7 bankruptcy) or businesses (a "business"
Chapter 7 bankruptcy). A Chapter 7 bankruptcy typically lasts
three to six months.
In a liquidation bankruptcy,
some of your property may be sold to pay down your debt. In
return, most or all of your unsecured debts (that is, debts
for which collateral has not been pledged) will be erased.
You get to keep any property that is classified as "exempt"
under the state or federal laws available to you (such as
your clothes, car, and household furnishings). If you don't
own much, chances are that all of your property is exempt
and you have what is known as a "no asset" case.
If you owe money on a secured debt (for example, a car loan,
where the car is pledged as a guarantee of payment), you have
a choice of allowing the creditor to repossess the property;
continuing your payments on the property under the contract
(if the lender agrees); or paying the creditor a lump sum
amount equal to the current replacement value of the property.
Some types of secured debts can be eliminated in Chapter 7
bankruptcy.
Not everyone can file for Chapter
7 bankruptcy. For example, if your disposable income is sufficient,
after subtracting certain allowed expenses, as set by the
Internal Revenue Service and monthly payments for
certain debts (including child support and debts that secure
property), to fund a Chapter 13 repayment plan, you may not
be allowed to use Chapter 7. The discharge granted under Chapter
7 may not terminate your obligation to pay some kinds of debts.
Though bankruptcy can eliminate many kinds of debts, such
as credit card debt, medical bills, and unsecured loans, there
are many types of debts, including child support and spousal
support obligations and most tax debts, that cannot be wiped
out in bankruptcy. For more on this and other requirements,
contact Pierson Legal Services or click
here to read more from the U. S. Courts website.
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Chapter
7
Chapter
11
Chapter
12
Chapter
13
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