In the United States, filing a petition with the federal bankruptcy court commences a Chapter 7 bankruptcy proceeding. The person filing a Chapter 7 bankruptcy is referred to as the debtor. The debtor is required to disclose to the court all of his or her property and debts and turn over all nonexempt property to the bankruptcy trustee, who then converts it into cash for distribution to the creditors. The debtor then receives the discharge of all dischargeable debts. This procedure, that varies from state to state, usually takes about 3 to 6 months to finalize the bankruptcy. When it's done, you can be rest assured that you're debt free and getting a second chance.
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If you're interested in filing there are many websites about bankruptcy filing that are worth checking out gathering information. The best sites are dedicated to providing you with all the information on bankruptcy that you could possibly need and want. Remember that the more educated you are on a topic such as this, the better off you are going to be, so you should check out as many as you can so that you can have the broadest range of information. Also, you can talk to your personal accountant to help you make the decision, because they will know your current financial situation. If you own a business you're going to want to make sure that your finances are in check, then decide that there is nothing else you can do to get out of your financial situation and the only way out is to file bankruptcy. There is certainly some drawbacks to filing bankruptcy so this is why you want to avoid it if you can. If you decide this is the direction you need, than talk to a local bankruptcy attorney. Most attorneys will give you a free consultation to help in your decision making. Always check references with consumer groups such as the Better Business Bureau.
When filing a Chapter 7 bankruptcy case, you will have to file many bankruptcy forms with the bankruptcy court disclosing your personal and real property, your income and expenses, debts and property transactions. The bankruptcy court will appoint a person called the "Trustee", who is assigned to oversee your case. About 30 days after your bankruptcy case is filed, you will attend the "Meeting of Creditors" or the 341 meeting where the trustee reviews your personal bankruptcy case, verifies your identity, and may have a few basic questions to ask you. Despite the meeting's name, creditors rarely attend unless there is some sort of fraud involved. This meeting usually lasts only a few minutes. A couple months later, you should receive a notice from the court that all debts that qualified for discharge were discharged.
Under the federal Bankruptcy Law, a discharge releases you, the debtor, from personal liability for certain specified types of debts. In other words, you are no longer required to pay any debts that are discharged. The discharge operates as a permanent order directing your creditors to refrain from taking any form of collection action on the discharged debts, including legal action and communications with you such as telephone calls, letters and personal contacts. Although a debtor is relieved of personal liability for all debts that were discharged, a valid lien that has not been removed by the bankruptcy case, will remain after the bankruptcy case is final. Therefore, a secured creditor may enforce the lien to recover the property secured by the lien. In other words, if your car is still under financing, the lender can repossess the vehicle, but in most cases if you work something out with them by reaffirming the debt,they will not. One thing for sure with Chapter 7 bankruptcy, you will remove debt from unsecured credit cards, medical bills and unsecured loans. This will give you the break you need and a chance to start over.
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