Chapter 7 Bankruptcy, USA
The Chapter 7 bankruptcy code governs the process of liquidation that is filed under the bankruptcy laws in the United States. It is the most common type of bankruptcy that is used by individuals and companies in order to escape the unsecured debt they have accrued. Chapter 7 bankruptcy is also known as a straight bankruptcy of a liquidation bankruptcy.
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US Chapter 7 bankruptcy explained
Individuals and companies that reside and operate in the United States are able to file for Chapter 7 bankruptcy. This type of bankruptcy entails the company facing liquidation to pay off debts to the creditors. The debtor is able to completely overcome their debt as all of their assets and funds are possessed in order to repay the creditor.
Chapter 7 bankruptcy is likely to remain on an individual’s credit report for a minimum of ten years. An individual’s credit rating is likely to be affected largely due to filing for bankruptcy in light of high amount of debt accumulated. There is certain criterion that individuals and companies need to fulfill in order to qualify under the Chapter 7 bankruptcy code. This includes going through a Means Test and receiving no credit counseling prior to filing for bankruptcy.
The process of Chapter 7 bankruptcy can take up to three to six months, costing individuals and companies an estimated USD$300. There are some assets that are able to be safeguarded in the bankruptcy process, including house mortgages and often car payments. Each individual’s case is considered separately and depending on the specific situation, individuals might be able to ensure that some other assets are secured in their bankruptcy.
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