Chapter 7 Bankruptcy

Unlike a Chapter 13 or 11, which allows for restructuring and settlement of debt, Chapter 7 Bankruptcy doesn’t necessarily involve a payment plan to settle with creditors. Instead, Chapter 7 liquidates your assets and then allocates the proceeds to your creditors. The debtor receives a discharge for MOST of their debts and creditors are no longer able to take action to collect monies owed.

That being said Chapter 7 can result in the loss of property and your home, so consider your options carefully and consult with the proper legal professionals to determine the right Chapter for you.

Under the new bankruptcy laws you will have to pass a bankruptcy means test in order to file a chapter 7. The first step in filing a chapter 7 is to find a good bankruptcy attorney to assist you.

A few questions you'll want to ask your bankruptcy attorney are:

-How many bankruptcy cases they work each month? Last year?
As in any legal matter, experience counts.

-Do they handle both Chapter 7 and 13 cases?
Find an attorney who is well versed in both chapters to better determine which may be better for your situation.

-How many attorneys do they have practicing bankruptcy law?
The more lawyers the wider the array of legal opinion and experiences available to you.

-What kind of continued legal education are they getting?
This is especially relevant with the changing bankruptcy laws.

Chapter 7 filings may not protect your home equity. If you have not provided a payment plan for your mortgage, your lender has the right to go through proceedings to sell your home.

Chapter 7 Bankruptcy filings are best suited for those who do not have many assets to protect. A Chapter 7 Bankruptcy can be discharged in just a few months after filing the petition.

Chapter 7 bankruptcy is considered a liquidation proceeding while Chapter 13 bankruptcy is a reorganization proceeding.

» DISCLAIMER: The information contained in this article on 'Chapter 7 Bankruptcy' is a collection of contributions by licensed mortgage professionals and is not the opinion of Broker Outpost LLC. Always consult a licensed professional before applying for a mortgage.