If you are considering bankruptcy and have already done some research into it, you are probably aware that there are multiple types of bankruptcy. Each type of bankruptcy has different requirements and puts you at a different type of risk as far as your assets, but chapter 7 bankruptcy can be advantageous for you. Well, at least as far as a form of bankruptcy that does as little damage as possible, knowing that given a choice, you would not want to file bankruptcy at all.
Chapter 7 bankrutpcy has its own twists and requirements which are different from other forms of bankruptcy. Sometimes it is freferred to as a liquidation bankruptcy. The person filing for bankruptcy needs to sign over all of their liquid assets (those assets which can be sold to pay off the debt) to a person who is appointed as the trustee.
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The role of the trustee is to watch over the selling off of all the assets, which the proceeds from the sale is used to pay off the debtor's creditors. Chapter 7 bankruptcy can be a very long process and can take 4-6 months before it is completed, although remember that other types of bankruptcies can take even longer than that, and will ultimately cost the debtor even more than chapter 7 bankruptcy.
Now I stated earlier that all assets are liquidated and sold off by the trustee, but this really depends on the bankruptcy laws in the state where you live, since those laws vary widely from state to state. In many state, the debtor is allowed to keep certain assets and possessions. However, in most cases (although not all), the debtor is required to sell of real estate and cars.
If you are considering bankruptcy, it is important to talk with a good bankruptcy lawyer who is intimately familiar with the bankruptcy laws in your state, as well as the federal bankruptcy laws. He can help you determine if you really need to file bankruptcy, and if so, the type of bankruptcy that will be most beneficial for you. For example, if the majority of your debt is with credit card companies, you should contact the credit card companies to see what can be worked out. Many times they will agree to terms that will allow you to NOT file bankruptcy, because they know full well that if you follow through with the bankruptcy, they are likely not to see more than pennies on the dollar for what you owe them.
Chapter 7 bankrutpcy can be your best option, but depending on your situation and the laws in your state, another type of bankruptcy might be a better option for you. Be sure to get an evaluation done by a qualified bankruptcy lawyer who knows the laws of your state and can advise you on your best course of action.
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