Filing Chapter 7 Bankruptcy
Chapter 7 of the Bankruptcy Code is also referred to as the “Straight Bankruptcy” or “Simple Bankruptcy. It is the most preferred of the six available types because it is the most simple and also the fastest to execute. It allows a debtor to eliminate almost all of his debts in just one or two quarters. Recent studies show that almost 70% of voluntary bankruptcies all fall under Chapter 7.
HOW IT WORKS
The Bankruptcy Code under Chapter 7 is all about the liquidation of the debtor’s assets. Under this law, the debtor, with or without the help of a bankruptcy attorney will turn over his non-exempt assets to a bankruptcy trustee. The debtor still gets to keep his exempt assets such as unemployment compensation, Social Security payments, and a particular equity of his home, automobile and appliances. Keep in mind that the amount of home equity the debtor is allowed to keep varies depending on the state. The trustee often sells most if not all of the handed over assets and the proceeds are used to settle the consumer’s debts.