In today’s world bankruptcies are much more common than they used to be. One factor is, of course, the drop in the economy.
Some people hesitate to explore the possibility of bankruptcy because they are embarrassed. There is no need to feel ashamed if you are considering bankruptcy. You are not alone. You are by far not alone.
Think about this: if you keep going down a path of destruction you will take others with you. You will take your family with you. You will take additional, future creditors with you. If you stop now, you can begin rebuilding your life and your credit. Your new creditors will be people you can actually pay, without worrying about mounds of past debt. You don’t want to take your family down a path of destruction. You don’t want to incur new debt all the while knowing you will never be able to pay it. If this fits how you feel, it is time to begin fresh.
Benefits of Bankruptcy
After bankruptcy you will have to begin rebuilding your credit. Your credit report will show that you have filed for bankruptcy for a period of time. But much of your debt will be extinguished and you can begin rebuilding your credit by establishing new credit accounts and paying the bills timely.
One of the primary purposes of bankruptcy is to discharge certain debts to give an honest individual debtor a “fresh start.” The person has no liability for discharged debts. In a Chapter 7 case, however, a discharge is only available to individual people, not to partnerships or corporations. Although an individual Chapter 7 case usually results in a discharge of debts, the right to a discharge is not absolute, and some types of debts are not discharged. Moreover, a bankruptcy discharge does not extinguish a lien on property.
Chapter 7 Bankruptcy for Individuals and Businesses
Chapter 7 liquidation is one type of bankruptcy available to an individual. It is also available to businesses.
After filing a chapter 7 bankruptcy, a bankruptcy trustee will take certain nonexempt property from you, if you have it, and sell it for the benefit of your creditors. Exempt property includes basic necessities and a limited amount of other assets, such as a limited amount of jewelry. Many people filing chapter 7 bankruptcy have no nonexempt property.
Who Qualifies for Chapter 7 Bankruptcy?
To qualify for relief under chapter 7 of the Bankruptcy Code, the person filing may be an individual, a partnership, or a corporation or other business entity. Relief may be available under chapter 7 irrespective of the amount of the person’s debts.
A person is not permitted to file a Chapter 7 bankruptcy if the person has had a bankruptcy petition dismissed in the past 180 days due to the person’s purposeful failure to appear before the court or comply with orders of the court, or if the person voluntarily dismissed the previous case after creditors sought relief from the bankruptcy court to recover property upon which they hold liens.
In addition, no person may be a debtor under chapter 7 or any chapter of the Bankruptcy Code unless he or she has, within 180 days before filing, received credit counseling from an approved credit counseling agency either in an individual or group briefing. There are a couple exceptions to this rule.