Chapter 7
Chapter 7 refers to the chapter of the Title 11 federal statutes that govern 'straight' bankruptcy (liquidation) - the bankruptcy provision most frequently used by individuals. Chapter 7 bankruptcy liquidates your assets and cancels most of your debts. However, the debtor can retain certain property that is specifically "exempt" under his choice of Federal law or her State's law, such as tools of one's trade, limited equity in a car and house, and some personal effects. To officially 'file' for bankruptcy, you file a two-page petition and several other forms with the bankruptcy court in your area. It normally takes up to six months and costs about $200.
Filing for bankruptcy puts into effect an "automatic stay." This immediately stops creditors from trying to collect so they can't take your wages, your savings, your car, house or property, or stop your utility service or welfare benefits.
During your bankruptcy proceedings, your finances are in the hands of the bankruptcy court. It assumes legal control of your property and the debts you owe as of the date you file. Nothing can be sold or paid without the court's consent. You get to keep, with a few exceptions, the property and income you acquire after you file for bankruptcy.
|
