Included in the Bankruptcy Code, chapter 7 is a bankruptcy plan accessible to both individuals and institutions on filing a petition and all mandatory declarations in connection with the debtor's assets and income. You'll find expenses amounting to several hundreds of dollars that comes with processing the petition. Still, payment with installments can be outlined, granting the debtor to increase payment as long as 180 days. Chapter 7 is normally, though not exclusively, a voluntary option.

A precursor to filing a bankruptcy petition for an individual is credit counseling at a credit counseling agency that's operating with the proper approval. This counseling must have happened in less than 180 days of filing the petition. In the event of the creation of a plan to manage the debt, this plan must be made available when submitting the required paperwork with the court.

Chapter 7 offers immediate relief for the debtor by putting a stop for a time to all activity on the part of the creditors to recover debt. Additionally, filing a chapter 7 leads to assets as being categorized as exempt and nonexempt. The ones categorized as exempt, such as mortgaged property, are not part of the liquidation process under chapter 7 being secured by other creditors.

As chapter 7 allows the liquidation of assets in accordance with a prescribed hierarchy as a way to make sure the suitable return to unsecured creditors, filing a petition presupposes that a debtor will release possession of estate assets not secured by exemptions, including property. While individuals can anticipate having a few or all of their debts discharged, a measure which enables them to resume their lives, this is not available for businesses involving partnerships or corporations. Naturally, existing responsibilities including mortgages on property may not be discharged.

Under chapter 7, a bankruptcy trustee is assigned to handle the disposal of nonexempt assets in order to understand the claims of creditors. These nonexempt assets may perhaps be money or property which is free of liens and capable of being sold.

The bankruptcy trustee puts together a meeting with the creditors identified by the debtor that the debtor is obliged to attend. At the meeting the debtor is going to be subjected to questioning from both the creditors along with the trustee. In the case of the creditors, the questions will likely pertain to financial concerns, including the debtor's assets. The trustee, nevertheless, will be concerned to clarify legal matters relevant to creating a full disclosure for the court to be able to facilitate the discharge of debts.

If proof could be offered to the court that the debtor has adequate income, the debtor may opt for reaffirmation of a specific debt, before discharge. In this case, there is an arrangement made between the debtor and creditor to handle the debt that permits the debtor to retain possession on the property and restructure payments.

Also, in the case of individual debtors, assuming there is no failure to disclose information or mislead the court, the majority of debtors can expect to receive a discharge of some or all of their debts. Chapter 7 is appropriate for dealing with consumer debt.