Discharging debt with Chapter 7 bankruptcy
There are a number of different types of bankruptcy relief available in the US, Chapter 7 being one of them. When a debtor enters into Chapter 7 bankruptcy it means that all assets will be liquidated and creditors will be paid with the proceeds from the sale. Once this process has been completed, the bankrupt’s debts will almost all be discharged, allowing for a fresh, unencumbered restart of his or her life. A Prescott bankruptcy attorney sees both individuals and small businesses turn to this form of bankruptcy; it is the most common form in the US.
Once it has reached a point where the affected individual or small business sees no other solution, Prescott bankruptcy lawyers are contacted, they in turn file a number of documents with the bankruptcy court. Part of the documentation that is provided is proof that the debtor is not eligible to file a plan for reorganization or to develop a repayment plan which is often more favorable to the creditors, the debtor must also provide a complete list of assets. Once it is determined that the individual is eligible for Chapter 7 bankruptcy protection, the case is assigned to an administrator who sets up a meeting between the debtor and the creditors to discuss the liquidation. It is at this meeting that creditors may agree to a partial repayment, they can also refuse to cancel the debt if there appears to be evidence that the debt is somehow related to a fraudulent activity. There are some debts, student loans being one, which cannot be erased under the rules of Chapter 7 bankruptcies.
The entire process takes between four to six months to finalize, the process can become quite involved and it is advised that the debtor engage a law firm such as Freeman Huber Law PLLC. It is possible to file without the assistance of an attorney but is not advisable. During the hearings it will be determined what assets are exempt and cannot be disposed of and others that have no residual value and are simply treated as exempt. The sale of the non-exempt assets is made by the trustee who attempts to maximize the amount he can get.
After Chapter 7 has been declared it may be difficult to re-establish credit for some time, furthermore, it is not allowable under law to re-file again for a certain period of time.
Both debtors and creditors have certain protection available to them under existing US bankruptcy laws. If you find yourself or your company facing a financial challenge you will need a Prescott bankruptcy attorney to help you. You are invited to contact Freeman Huber Law PLLC.
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