Chapter 7 bankruptcy involve?
Chapter 7 bankruptcy involve?
Under Chapter 7 Straight bankruptcy is available if less drastic methods will not solve your financial problems. It allows you to discharge (extinguish) most debts. About 70% of all consumer bankruptcy filings nationwide are under Chapter 7.
Chapter 7 bankruptcy case begin?
Chapter 7 bankruptcy case begin when you file a petition with the U.S. Bankruptcy Court asking it to relieve you (or you and your spouse) from your debts. As of the date you file the petition, your assets will be under the protection of the court. In addition, most collection efforts against you must stop. However, if someone has co-signed a loan for you, your automatic stay does not stop creditors for seeking payment from your co-signer.
You have to disclose your finances?
When you file the petition, you also must file a Statement of Financial Affairs and schedules that, among other things, describe your financial history and list your income, all of your debts and your assets. These schedules are quite detailed :-
Your liabilities:
- your priority debts (such as taxes);
- your secured creditors (auto dealers, home mortgages, and so on);
- your unsecured creditors (department store credit cards and the like).
Be sure that you list all your creditors and their correct names and addresses. If you omit some, or provide incorrect addresses, you might not be discharged from those debts.
Your assets:
- all your real property, including any you own together with your spouse or other persons;
- all your personal property (such as household goods; clothing, cash, retirement funds,
accrued net wages);
- all property, whether real or personal, that you claim exempt from creditors.
Chapter 7 and loss of your Assets?
Under Chapter 7, you might well have to turn over many, if not all, of your nonexempt assets. What happens depends upon the classification of the asset.
What are exempt assets?
These are assets that you must list on your Statement of Financial Affairs and schedules and that you may shield from your unsecured creditors. The assets that you may protect in this way are defined by federal and state law.
Variations among the states are found concerning a broad array of other exempt assets such as autos, jewelry, household furnishings, books and tools of the debtor's trade.
- In about 15 states you may chose either of the two laws, while in most states you may use only the state exemptions. Exemptions vary widely. For example, under the federal statute a couple filing jointly may exempt a total of $32,300 in equity in their home, $16,500 for each of them. Thus, if the home is worth $65,000 and has a $30,000 mortgage, creditors can claim only $2,700 (the difference between the equity of $35,000 and the $32,300 exemption).
- Florida State allows a homestead exemption that protects from creditors a debtor's home and property so long as it does not exceed 160 acres elsewhere or 1/2 an acre in a municipality. Thus, an investment banker who filed bankruptcy has been able to retain a beachfront home reportedly valued at $3.25 million.
- In Georgia the homestead exemption is limited to $5,000.
What are nonexempt assets?
Everything not specified under the law. The Bankruptcy Code requires that you give all these nonexempt assets to the bankruptcy trustee. The trustee will then liquidate (sell off) these nonexempt assets for the benefit of your creditors. However, in actual practice, over 85% of Chapter 7 filings are "no-asset filings"— i.e., there are no assets left for unsecured creditors after the exempt assets have been claimed.
Bankruptcy Chapter 7 can not use to get rid all of your debts?
- Bankruptcy does not discharge all types of debt. If a debt is excepted from discharge you remain legally responsible for it.
- Exceptions include most tax claims, alimony, child support, many property settlement obligations from a divorce or separation, most student loans, fraud debts, and debts from a drunk driving problem.
- Chapter 7 bankruptcy also will not release you from damages for "willful and malicious" acts such as assaulting another person.
- Many debts incurred though the debtor’s fraud are also non-dischargeable. In this regard, there is a presumption of fraud in last minute credit card binges involving more than $1075.00 in either cash advances or luxury purchases within 60 days before a bankruptcy filing.
