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Is Bankruptcy a Fast, Easy Solution to My Debts?

When it is just more than you can handle to repay debts, choosing bankruptcy is something the right option to choose. Bankruptcy refers to declaring that you or your business simply cannot repay existing debts–at least not in the current form. In some cases it means reorganizing the debts and an effectual struggle remains to continue to pay the debts over the coming 5 years. And in other cases, it is a fairly simple, if not completely easy choice which results in the immediate discharge of essentially all debts.

Chapter 7 Bankruptcy is Fast. Chapter 7 Wipes Debts Essentially Entirely Away.

Chapter 7 is actually one of 6 types of bankruptcy in the U.S. Bankruptcy legal system. This is a court procedure liquidating non-exempt property which you own, and using these–if there are any non-exempt assets at all–to repay as much of the debts as possible. Whatever is leftover is wiped entirely clean permanently. A court appointed trustee handles liquidation of your assets which are not exempt according to the bankruptcy codes list of exempt and non-exempt property and assets. US Bankruptcy law does allow for the debtor to maintain some assets which are protected and exempt from liquidation in bankruptcy. Property which is exempt from bankruptcy according to federal guidelines remains yours even after bankruptcy.

Bankruptcy Abuse Prevention Act 2005 / Bankruptcy Consumer Protection Act 2005

These Acts passed into law in 2005 state that only those with incomes below the average for their state are eligible for Bankruptcy via the Chapter 7 statutes which are generally more preferable for discharging all debts. When filing chapter 7 in most situations the reason is to ward off any attempts by creditors to obtain a person’s home, garnish wages, or perform other adversarial actions in order to collect on debts owed. When filing chapter 7, there are some assets which will not be exempt such as a second car, jewelry with values over certain dollar amounts, etc.

After Chapter 7 Bankruptcy, No More Money is Owed. Period.

After Chapter 7 has been filed by a person or business, any unsecured debts, late hospital bills, any other type of medical or utility bills, unsecured credit cards and other credit lines like revolving credit lines as well as any unpaid rent will be permanently discharged which means they are wiped away for good. On the other hand, student loans which are federally guaranteed, taxes from the past 3 years, alimony, child support, fraudulent debts, or government fines and penalties will not be wiped out but will remain the responsibility of the person or company filing bankruptcy.

Business Chapter 7 Bankruptcy

For a company such as a corporation, LLC, or other type of business partnership, there is technically not a bankruptcy discharge; but rather, the bankrupt business will be dissolved. Chapter 7 bankruptcy discharges are reserved for personal individuals, whereas corporations or other types of business debtors simply close down and the book is closed and the case is complete.

How Will Chapter 7 Bankruptcy Affect My Credit Report

A Chapter 7 remains listed as a bankruptcy on a credit report a total of 10 years after filing for bankruptcy with the courts. A bankruptcy lawyer may advise you best regarding the appropriate and most optimum point at which you could consider filing bankruptcy, whether that means filing chapter 7 or chapter 13. Because a good attorney has had years of experience, they’ll help you make sure the requirements become completely resolved and met and hence you achieve a more smooth bankruptcy filing without major issues.

Although Not An Easy Choice, Bankruptcy Can Solve Your Problems Quickly

In the majority of cases, each individual debt is completely removed which releases you as the debtor from future liability and gives you the opportunity to quickly start over instead of spending years attempting to turn your financial situation around. With bankruptcy, the results are generally very fast, and although they’re not always the most easy decisions to make, the effects of financial relief from bankruptcy can be a very effective method to solve your overwhelming debts.

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