Author: Alex Campos
We have all heard of chapter 7 bankruptcy, although many of us if asked probably could not give a precise answer to what exactly it entails. Every day people make mistakes when filing for bankruptcy that probably could have been avoided if they had better understood the different types of bankruptcy.
Certainly no one wants to become involved in bankruptcy proceedings. Anyone who does will have to have debts that greatly exceed his or her net worth and, in addition, have no visible or viable means of paying back the debts.
There isn\'t just one kind of bankruptcy proceeding, in fact there are a number including chapter 7 (the focus of this article) and Chapter 11. Chapter seven is more for individuals.
The Definition Of Chapter 7 Bankruptcy
When somebody goes through the process of chapter 7 bankruptcy, according to United States of America law they are essentially liquidating all assets (that are not legally exempt from liquidation) so they can pay back their creditors.
Chapter 7 is an option open to individuals, businesses, partnerships and corporations. There is, however, a special clause open to the individual within the framework of this chapter filing that is not available to the other entities.
This extra clause for the individual is commonly known as a discharge. In essence what this discharge entails is the opportunity of freeing the individual from a host of certain debts.
How to get started filing chapter 7 bankruptcy
Generally speaking to file a chapter 7 bankruptcy one mast supply the courts with copies of their tax returns, contracts of an executive nature, statements of financial affairs, all proof of liabilities and assets as well as documents to prove one\'s current income and necessary expenses.
For individuals other additional documentation has to be supplied to the courts. As an individual you can expect to have to supply copies of statements of income and or employee payments, credit counseling reports etc, also students will need to supply documentation for interest payments on student loans.
This is, of course, a brief overview and more detailed information is provided by the government and federal courts at the website uscourts [dot] gov. However, remember filing for Chapter 7 protection by yourself is not advised, you should get professional help from a lawyer.