What Is A Chapter 7 Bankruptcy?

It goes without saying that trying to determine whether or not you need to declare a bankruptcy can be a very difficult decision. This is something that will impact your future credit, your self-image and even your reputation. However, this is also an avenue that could potentially improve your quality of life over the short term a considerable amount, especially once the calls and the letters stop from the creditors. But, how can you tell if a chapter 7 bankruptcy is going to be right for your individual situation?

With a chapter 7 bankruptcy, the trustee will cancel most, if not all, of the debts that you currently have. During this time, the bankruptcy trustee may also liquidate, or sell, some of the property you have so that you can repay the creditors. This form of bankruptcy is often called a ‘liquidation’ or ‘straight’ bankruptcy and gets its name from the law that is contained in the federal bankruptcy code for chapter 7.

You should know that a chapter 7 bankruptcy is also going to cost you some time and money to complete. In general, you can expect that this process may take about six months from start to finish. You will also be looking at paying roughly $300 or more in administrative and filing fees. However, you will probably only have to make one trip to the courthouse to get everything finished up. Sometimes lawyers will not ask for compensation.

If you have already had a bankruptcy charge in the past six to eight years, you will not be able to file and use the chapter 7 bankruptcy. It could also be that you may be better off completing a chapter 13 repayment plan all depending upon your debt burden, expenses and income. For any questions, you can look to the help of a bankruptcy lawyer so that you can be sure you are making the right decision.