Filing Chapter 7
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Filed under Bankruptcy
The most important question that is asked while filing Chapter 7 bankruptcy is “Do you need to file a bankruptcy petition?”[br]
If the question is not answered appropriately before the court, the bankruptcy petition will get disqualified. It is important to consult with legal experts before making a bankruptcy petition.
Filing Chapter 7: Eligibility
Individuals, cooperatives, partnerships and business entities can consider filing Chapter 7 bankruptcy. However, the two most important exclusions under Chapter 7 are:
- An individual who has received bankruptcy discharge in last six to eight years.
- If it is feasible to clear debt under Chapter 13 or Chapter 11.
Filing Chapter 7: Factors to Consider
An individual filing Chapter 7 bankruptcy claim should consider following points:
Factors in favor of bankruptcy:
- Filing Chapter 7 petition discharges most of the debts such as credit card payments, loans and business debts.
- Bankruptcy puts a stay on legal and forcible actions against the debtor for a collection of defaulted payments.
- Essential commodities such as car and home are exempted from the liquidation process.
- One can file fresh cases against the creditors with disputed debts.
Factors against filing bankruptcy:
- Non-exempt property of the debtor is likely to be sold or liquidated to repay creditors.
- Bankruptcy affects credit status and social reputation. It reflects on the financial reports for a period of 10 years.
- A bankrupt individual suffers some restrictions in financial dealings.
- Bankruptcy process involves money. It comes in the form of legal processing fees, attorney fees, cost of credit counseling and trustee’s fees.
Most of the US bankruptcy cases are filed under Chapter 7. Here are government statistics on total bankruptcy filings between June 2005 and June 2009.[br]
|
Chapter
|
||||
|
Year
|
7
|
11
|
12
|
13
|
|
2005
|
1,196,212
|
6,703
|
290
|
433,945
|
|
2006
|
1,164,815
|
6,224
|
360
|
313,085
|
|
2007
|
450,332
|
5,586
|
386
|
294,693
|
|
2008
|
615,748
|
7,293
|
314
|
344,421
|
|
2009
|
907,603
|
13,951
|
422
|
384,187
|
For filing Chapter 7, an individual can:
- Buy respective federal forms, fill in all the necessary details and submit them at local bankruptcy court.
- Fill online bankruptcy forms, which are known as preparers.
To avoid legal hassles and to seek legal advice in the case, one can hire bankruptcy attorneys. The attorneys are well versed in clarifying legal ambiguities and work for the benefit of their clients.