Chapter 7 bankruptcy is a legal process which exists, and was created, as a debt solution for those who are overwhelmed with debt, and further, this chapter of bankruptcy is intended to help borrowers who have no feasible way of complying with the terms of the debt in it's current form. This chapter is able to provide consumers help with debt and financial hardship.
How Does Chapter 7 Bankruptcy Work?
Chapter 7 Bankruptcy is a legal process of liquidation of the borrowers assets in which the proceeds are used to repay all or a portion of the debt owed to the creditors.
Liquidation bankruptcy is available to both businesses and individuals.
The Process of Chapter 7 Bankruptcy
The first step of the process of Chapter 7 Bankruptcy is the petition submitted by the borrower. The petition includes a detailed financial package that outlines the assets, liabilities, and expected earnings of the borrower.
Once the court has the filed petition a trustee is appointed to the bankruptcy by the court.
The trustee will then organize and carry out several meetings with the creditors to determine the allocation of the future proceeds from the liquidation of the debtors assets.
The liquidation of assets is executed and the proceeds are distributed as planned.
Other Important aspects of Chapter 7 Bankruptcy
Remember that bankruptcy is a last resort and is not a pleasant or relieving experience. Nor is it cheap. There are many consequences which carry a long shelf life and the consideration of bankruptcy should be done so with extreme care, time, responsibility, financial consideration, and the proper resources and guidance such as a qualified attorney.