Chapter 7 is designed to help individuals and/or businesses liquidate assets and repay creditors to resolve financial issues. You do not necessary lose all of your assets. Chapter 7 Bankruptcies are administered by Trustees appointed by the Bankruptcy Court. These individuals are responsible for reviewing your bankruptcy schedules, your supporting documentation, your financial documentation, and are responsible for the distribution of any proceeds or non-exempt assets to creditors.

The automatic stay: Upon the filing of a new bankruptcy case, most lawsuits are put on hold, either temporarily or permanently. This includes most lawsuits, collections, repossessions, garnishments, tax collections and for many and perhaps most importantly foreclosures. Creditors generally may not harass Debtors, call them, correspond or take other collection action during the pendency of the bankruptcy case.

Chapter 7 bankruptcies are the most common form chosen by individual consumers. The Chapter 7 proceedings begin with the debtor's filing of a petition with the bankruptcy court, which triggers the "automatic stay".

While filers are relieved of most debts, some debts are not dischargeable, such as certain taxes, damages resulting from the debtor's willful or malicious acts, debts incurred by giving false financial information, domestic support obligations, and some debts incurred just prior to filing for bankruptcy.

Bankruptcy is available to businesses that are unable to pay their debts. Chapter 7 business bankruptcies are conducted in the same manner as Chapter 7 consumer bankruptcies. However when the debtor is a corporation, it ceases to exist after liquidation and distribution, and there is no reason for discharge because the creditors cannot seek payment from an entity that no longer exists.

Chapter 7 bankruptcy can also help to delay the foreclosure process. A Chapter 7 bankruptcy would temporarily stop a lender's right to foreclose on a debtor's home. A temporary stop can give a debtor a chance to find alternative solutions to their problem, such as finding means for extra money, obtaining additional time to make alternative living arrangements and possibly being able to avoid foreclosure altogether.  A Chapter 13 Bankruptcy may be more appropriate if you can resume payments on the mortgage and you can fund a plan to pay the arrears.

After the filing of the bankruptcy case, creditors who are secured, i.e., have collateral for their debt such as mortgages or auto liens may seek permission to foreclose or repossess these assets, or they can wait until after the case is complete to take action. A debtor may also enter into an agreement to resume payment on these assets in order to save these assets.

Note:The Information you obtain at this site is not intended to be legal advice. You should consult an attorney for advice regarding your own situation.

The material on this website is for general informational purposes only. It is not legal advice nor provided in the course of an attorney-client relationship. As a result, Richard J. Hackerman, P.A. and Richard J. Hackerman, are not responsible for any information contained on or omitted from this website or any site hyperlinked to this website.