We have already spoken about the fact that Chapter 7 is commonly used when it comes to declaring bankruptcy. The main benefit of this lawsuit is the fact that you can have the majority of your debts liquidated. It provides you with desired financial relief and ability to have a fresh start. However debtors should also consider the fact that Chapter 7 is also used in order to liquidate assets as well as cover all debts and proceed with necessary payments to the creditor. Bankruptcy courts assign a trustee for every particular case. He will handle all your assets in case of both business and individual bankruptcy. Trustees check the assets in order to choose the ones that can be sold to cover the debt. You may now think that you are going to run out of all your assets and be left with nothing. However it will never happen due to bankruptcy laws which prevent creditors from collecting exempt assets.
How can Chapter 7 liquidation be used to raise money for the debt?
The main idea is that your property will be liquidated by trustees for the only purpose which is to raise money and cover your debt. You should also note that liquidating assets is prescribed by specific regulations and laws. In accordance with these laws there are several types of creditors. Some of them may have a higher level of priority in comparison with others. For instance, child support and alimony are considered to be of the highest priority. These debts will be the first in the list. And assets will be liquidated in order to cover them first of all. Debts connected with bills and credit cards are of lower priority.
Chapter 7 Bankruptcy liquidation regulations allow debtor to leave some amount of money or assets which are protected from collecting or demanding by creditors. This is mostly one of the main features of the lawsuit which makes it so popular with business and individuals who have faced the necessity to declare bankruptcy. These assets may include retirement account, home or car. In this case court will evaluate the difference between your debt and total value of all assets.
Your debt will be wiped out even if you do not have any assets left
In some situations the debts are extremely high. And available assets do not give a chance to cover all creditors’ expenses considering the difference of their total value and the debt itself. In this case some debts can be totally discharged and erased by Chapter 7. That is why this lawsuit is also known as none-asset bankruptcy.
Personal Bankruptcies Lawyer can be Necessary
In spite of all benefits and features of Chapter 7, this lawsuit can be rather complicated for those who have never dealt with such situations before. That is why personal bankruptcies lawyer may also come in handy. Every case is individual and unique. That is why it needs detailed revising and overviewing in order to choose the most appropriate strategy.