Chapter 7 Law – What Is It?
Chapter 7 law is one of the bankruptcy laws that can be used to institute bankruptcy proceedings if the borrower has an excessive amount of debt and unable to repay it. According to the law a trustee can keep some property belonging to the debtor as a security for the payment. Also, the creditors can no longer take necessary actions to collect the debt from this individual unless it is related to the necessary lien. Chapter 7 bankruptcy laws, is also known as “liquidation”. It is considered to be the simplest and quickest form of bankruptcy and is available to individuals, married couples, corporations and partnerships.
When the debtor files a bankruptcy case, a bench ruling is rendered to stop the creditors. The process is known as automatic stay. After a month, the administrative trustee’s office appoints a trustee to conduct this case. It is the duty of the trustee to raise as much money as possible by liquidating all the assets belonging to the debtor at that time. This amount will be given to the creditors as per priority. Another obligation of the trustee is to keep records about the debtor and report any pettifogging activities. The individual’s liability depends on the trustee’s judgment.
As mentioned before, the property that is kept as lien can help in exemption of certain amount. It is the job of an attorney to determine the value of these assets and also he can advice which of the assets will be placed under a trustee so as to make a proper lien amount. In case creditors are not agreed with the attorney they can file a complaint within 60 days after the trustee meets the individual to decide about the assets. The trustee has to file a notice of opposition for any exemptions within 30 days after meeting with the individual. If the creditor has any objections it means that such situation can be endless.
It is important to notice that most debts are dischargeable, but some are in particularly excluded from being discharged, i.e. taxes that are less than 3 years old, child support obligations, debts incurred by fraud, theft and student loans. Creditors have the right to apply to re-open the case if they are not satisfied with the discharge.
There is no doubt that bankruptcy chapter 7 law is a possibility to remove debts but there are negative aspects as well. It is important to understand how it can work in your favor. Only understanding of beneficial issues on the bankruptcy can lead your to a debt free life. In order to get the whole information, visit: http://www.legallawhelp.com/legal_law_channels/bankruptcy_law/chapter_7_bankruptcy.html.
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