Concept
The chapter 7 implies that an individual or a business is unable to pay debts and files to liquidate the available assets to pay off the debts.
Individual Bankruptcy Chapter 7 – An individual would simply seek Federal court to file for Chapter 7 bankruptcy. He may get some property exempted of bankruptcy and could further use it for residence purpose. However rest of the available assets and property gets sold out to repay the existing debts. This kind of bankruptcy helps in waiving off debts on unsecured loans. However house mortgage could not be waived off at all and remains a debt to be settled by the available assets or further financial arrangement. After the bankruptcy has been agreed upon the debtor agrees to pay off the remaining debts in agreed time frame.
He has to ensure that he can’t fail in paying this agreed upon amount in agreed upon regular and periodical times. Chapter 7 bankruptcy by law stays on an individual’s credit report for no less than 10 years. This implies that if would certainly impact the availability of credit to the individual. Comparatively this individual would get higher interest rate in the marker for any loan he would apply for. After discharging the bankruptcy properly anyone can revive the credit basis proper management of finances and good credibility amongst creditors over a period of time.
Business Bankruptcy Chapter 7 –A business can file for chapter 7 Bankruptcy in the event of unavailability of cash and resources to carry forward the business. This implies that the business would just stop the work and surrender in front of the Federal court with the available fixtures, assets and Debts. The Trustees in the Court would assess the possibility and allow further process basis the evaluation of available assets and fixtures. They would instruct the creditors for further course of action in terms of payment of debts and the agreement of payment.
If it’s a big company then the entire company with the human resource would be sold for payment to the creditors. In the event of small companies than the employees may be terminated due to poor financial condition of the company. The Trustees of Bankruptcy play a crucial role here in proper distribution of available funds to the secured creditors. Secured creditors are not entitled in any decision making exercise and would rather abide by the instructions provided by the Bankruptcy Trustees.
Suitable Time To Be Consulted
It’s always recommended to consult a Bankruptcy attorney for filing a chapter 7. These bankruptcy attorneys help in assessing the financial condition of the individual or business and market. Basis the current financial analysis they would suggest the suitable time to file a bankruptcy. Chapter 7 remains for a longer time unlike chapter 13. Therefore it’s always advisable to consult a subject matter expert before filing such a bankruptcy. These Attorneys also ensure smooth procedure and proceedings of bankruptcy. They consider the interest of both creditors as well as Debtors. Debtors would want to repay as much as they can with the available money and assets. Creditors would also want to get as much as they can at the same time.
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