There are several forms of bankruptcy that can be utilized by an individual or corporation. Determining which option is best, depends on the individual situation of the debtor. This article will give a brief overview of Chapter 7 Bankruptcy.
Relief under Chapter 7 is available to several entities, including partnerships, individuals or corporations and other business entities. The purpose of Chapter 7 is to give the debtor a fresh start. Therefore all debts will be forgiven in most cases. However, it is important to note that there is no absolute right to avoid debt payment. Some debts, like a lien on property, cannot be discharged in bankruptcy.
A petition begins when the debtor files in the bankruptcy court which has jurisdiction in the area where the petitioner lives or the business entity is organized. The following information is essential to complete a bankruptcy filing:
- A creditors list with the nature and amount of their claims
- Specific information about the debtor’s income
- The petitioner’s property list
- A schedule of living expenses
Filing a petition will automatically stop most collection actions against the petition filer and his or her property. The bankruptcy clerk will contact all the creditors named in the petition. Between 21 and 40 from the date the petition is first filed, a meeting between the debtor and trustee takes place. Any creditors present, as well as the trustee may question the debtor at this time. No judges are in attendance during this meeting. Unless additional questions arise, a discharge is usually granted anywhere between 60 and 90 days of the first creditors meeting.
Chapter 7 discharge is subject to many exceptions. Anyone considering bankruptcy may wish to contact an experienced legal professional before filing a bankruptcy petition.
Source: Stockton Law Office, LLC, “Chapter 7,” accessed on July 28, 2014