How does Chapter 7 bankruptcy work?
There are a number of different legal solutions for bankruptcy; these are called “Chapters.” Chapter 7 bankruptcy in Washington DC is by far the most common form. Chapter 7 is a type of bankruptcy that demands that the debtor liquidate all his or her assets, the proceeds from the liquidation are then used to pay the creditors as much as possible. After this process has been completed the court will declare the applicant bankrupt and most, but not all, debts will be discharged, this allows the individual an opportunity to start over with a clean slate. Chapter 7, although usually used by individuals is also applicable to business that wish to close their doors and cease trading.
Chapter 7 bankruptcies in Washington DC start with the realization that the person is so deep in debt that bankruptcy is the only solution. Once this critical decision has been made, the individual and an attorney file a number of papers with the court. At this stage the debtor must effectively demonstrate to the court that they are either not eligible or able to file a repayment plan and provide a comprehensive list of all assets. After the court reviews the submissions and the court is in agreement, the debtor is allowed to go ahead with the bankruptcy procedures which include a creditors meeting. At this meeting with the creditors the debtor and his creditors discuss what assets can be liquidated, at this time the creditors can agree to accept partial payment of the debt or they can refuse if they have reason to believe the debt was incurred fraudulently. Certain debts such as student loans are not eligible for discharge; they must be paid in their entirety.
It usually takes four to six months for a Chapter 7 bankruptcy in Washington DC to push through to completion. The process can get very convoluted and many people decide to hire a bankruptcy attorney. Certain assets that are owned by the debtor are ruled as ineligible and cannot be sold and the creditors can agree that other assets have no material value so they too are declared as ineligible assets. The remaining assets are disposed of by a court appointed trustee, the proceeds are then distributed to the creditors and the debt is discharged.
In the early 2000s the rules that apply to filing Chapter 7 bankruptcy in Washington DC were revised to make it harder to turn to bankruptcy as the solution. This is one reason why having an attorney to represent and guide you is so important. For more information,