Chapter 7 bankruptcy, also known as straight bankruptcy, is one of the most common forms of filing for individuals. It is also the most simple and quickest form of filing. Chapter 7 bankruptcy causes an individual to give up non-exemptible property to the creditor in order to pay back a majority of the debt they owe. This will then give the debtor or individual the ability to not have to pay back a small portion of the debt. There are certain possessions that cannot be taken away from individuals filing chapter 7 bankruptcy. These non-exempt properties cannot be taken by anyone to be resold for decreasing the debt owed.
Liquidation is the process of giving away your belongings to help settle debt. It is the same as when a store has a liquidation sale; they are trying to get rid of every piece of inventory. Just because a person liquidates their property does not mean they rid themselves of all their debt. As it is with any form of bankruptcy, a person is not entitled to a reprieve of any debt if they are found to have committed some form of fraud when filing for chapter seven bankruptcy. Debtors are also not exempted of all debts. Student loans and court ordered restitution are not covered through bankruptcy. The property that is exempt from chapter seven bankruptcy are necessities such as clothing and food. These things cannot be taken from a debtor to help in the payment of the debt they owe.
Chapter 7 bankruptcy can only be filed once in an eight year period. The language of filing for bankruptcy is designed to be confusing to the common individual. A consultation with an attorney may be the best way to understand what is being said, what is expected of you and what you are entitled to keep when filing. The only way to be sure you take care of everything necessary and are on the right track to pulling yourself out of the bankruptcy hole is through the help of a knowledgeable attorney. Without their help, one may get lost in the bankruptcy rhetoric.
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