Chapter 7 Bankruptcy: Liquidation
There are two ways that you can file for bankruptcy in the United States as an individual . You can file under Chapter 13 or Chapter 7 according to the Title 11 of the United States Code (Bankruptcy Code). People who file for a Chapter 7 Bankruptcy often do so because they can no longer afford to pay off any of the debt owed to the creditors. The only option available to them is a “straight bankruptcy” or a liquidation of all non-exempt assets. The sale of the debtor’s property is the n often divided up amongst the various creditors in order to pay off the debt.
Individuals Filing a Chapter 7
Any person that resides or owns property in the United States may file for bankruptcy. Most who file under Chapter 7 have little or no money left and have just the basic necessities to survive. Certain assets of the individuals’ that are exempt from bankruptcy may be retained by the filer. However, most of the property will be sold and distributed among the creditors to pay back any debt. An individual filing for bankruptcy under Chapter 7 must first qualify under the means test. If they are still considered eligible, they can begin the process of filing for bankruptcy. The process generally moves quickly for individuals and some people have been granted a discharge in as little as 3-5 months.
Businesses Filing a Chapter 7
Businesses as well as individuals can file for bankruptcy under Chapter 7. If a business is no longer able to pay their creditors back or is forced by its creditors to file for bankruptcy, the business must cease all operations. Once the business has filed, a Chapter 7 Trustee will be appointed to the company and almost immediately sell the company’s assets and distribute the proceeds to creditors. This does not always mean that the employees will lose their jobs. If a large company files a Chapter 7, entire divisions of the company may be sold off to other companies, including employees. If the business is a corporation or partnership it will most likely be dissolved.
Some of the major reasons for filing chapter 7 bankruptcy in the US include medical debt, injury and more. Medical tends to rank at the top of the list of reasons for filing bankruptcy. Some other causes include job-loss and underemployment. As a result of serious car accident or other injury or illness, many folks are forced to bankruptcy. On the other hand, some situations where a person was in a major accident and found a good dallas car accident lawyer, they would have their medical debt covered by the insurance company of the responsible driver. Other situations such as trucking accidents and more can cause serious injury and even wrongful death, in which case the survivors could be entitled to compensation for their loss. The loss can be great and can cause more than significant loss financially but also emotional and mental anguish.