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