An Overview of Chapter 7 Bankruptcy

by | Dec 12, 2014 | Bankruptcy Law

In today’s uncertain economic climate, more people are finding themselves heavily in debt. Some of these debts are cause by irresponsible spending habits. Others are caused by underemployment, unemployment, and high medical bills associated with an lengthy illness. These factors combined with rising interest rates and consumer prices can result in a person having more money going out of his household than he has coming into it. If you find yourself in any of these situations, you can make a new financial start in life by filing for Chapter 7 Bankruptcy. You can decide if this legal status is for you by learning more about Chapter 7.

The United States Constitution give Congress the authorization to pass laws regarding bankruptcy. Article I, Section 8 of the United States Constitution mandates that these laws be fair in nature. With the power, Congress passed the Bankruptcy Code in 1978. The Bankruptcy code, the Federal Rules of Bankruptcy Procedures, and local rules used by individual bankruptcy courts dictate how bankruptcy cases will be carried out. The official forms used in a bankruptcy case come from the Bankruptcy Rules. A federal bankruptcy judge will oversee individual cases and is the final decision-maker in all cases. This judge can decide which matters pertain to a case and whether a person qualified for bankruptcy status.

Chapter 7 Bankruptcy is a legal status that provides for the liquidation of a debtor’s assets. These assets must meet the nonexemption status. After it’s decided which assets are exempt and nonexempt, the nonexempt assets will be sold. The money obtained from the sale of the items will be parceled out amongst the qualifying creditors. A debtor will start the bankruptcy process by filing a petition with the appropriate court. A debtor must also file:

     *     a schedule of assets

     *     a schedule of liabilities

     *     a schedule of current income and expenses

     *     a statement of financial affairs

     *     a schedule of executory contracts and unexpired leases

After the above-mentioned documents are filed, a debtor will follow additional procedures to see if he qualifies for bankruptcy. For more information, please contact professionals like the ones at Chris Carouthers & Associates LLC.

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