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Chapter 7 Bankruptcy

Figuring out how to save oneself from overwhelming debts can be stress-filled, besides the unnerving worries caused by the debt itself. To many individuals, the thought of needing to sell any property or asset they have worked very hard for, to be able to pay off their debts, is just too painful a thought; however, this is not the only way to regain financial stability and a brand new financial start.

Families and individuals who get harassing calls from collections agencies demanding they pay their debts create a lot of pressure. The pressure becomes even more intense due to calls at the office, threats of repossession, or threats of garnishment of wages to satisfy the debt.

There is a legal way that will give a debtor just the solution that he/she needs for another chance for financial security: Chapter 7 bankruptcy.

Bankruptcy is one of the legal options available for individuals and businesses, with crushing debts, which can help regain control of their finances. But besides allowing them to legally declare their inability to pay their debts, chapter 7 also requires the immediate cessation of any means employed by creditors and collecting agents that will enable them to collect debt payments. This means the end of e-mails, text messages, letters, lawsuits, and so forth.

There are different chapters in the Bankruptcy law, each designed to address the unique financial situation a debtor is in. Chapter 7, specifically, is best for individuals or businesses with properties, but whose income falls within the chapter’s stipulated limit. Also known as liquidation bankruptcy, chapter 7 requires the liquidation of some properties by a court-appointed trustee, who will also allocate the amount earned to creditors. If there are different properties owned by the debtor or business, then the debtor has the legal right to protect some properties and keep these from being sold. After the property has been sold and the amount distributed to the creditors, the remaining amount from the sale (if there is any) will be given to the debtor (or property owner). Only those categorized as non-dischargeable debts (such as student loan, alimony and court fines) are to be paid; business and personal loans, medical bills, and debts from use of credit cards, which are called dischargeable debts, are usually forgiven by the court, freeing the debtor from these types of loans.

To be able to understand more the requirements of chapter 7 bankruptcy law, it is best that the individual is guided by a knowledgeable bankruptcy lawyer, who will also be able to help him/her prepare and submit all the necessary documents on time.