Do you need to file bankruptcy and are feeling a bit confused about all the different legal terms being thrown around? If so, it helps to become familiar with the terms frequently used with the Chapter 7 form of bankruptcy.
What makes Chapter 7 such a unique form of bankruptcy is that it involves asset liquidation. This means that all applicants are required to pay off as much as possible to creditors before the remaining debts can be eliminated. This often means having to liquidate assets to some extent in order to pay for those debts.
Not all assets need to be liquidated in order to use Chapter 7 bankruptcy. You will be given plenty of exemptions, which are the assets that you are allowed to keep and do not have to liquidate. For example, you may be able to keep a vehicle for each person in your household or keep a certain value of your home that has been paid off.
Every state has its own laws that define what assets can be kept and which must be liquidated. You should always work with a lawyer to determine that you are following the bankruptcy proceedings in the correct way when it comes to exemptions. This will help maximize your exemptions and prevent your bankruptcy from being denied.
The process of forgiving a debt that you owe during a bankruptcy proceeding is known as a discharging debt. However, every debt will not be discharged. Some debts you must always pay back to the creditor, such as student loans and taxes. If you have outstanding alimony or child support that you owe, those must be paid back as well.
The debts that typically can be discharged are the unsecured debts that do not have any sort of assets that can be taken back if you can't repay the debt. Credit card debt is the most common example of an unsecured debt that can be discharged
Your bankruptcy case will be assigned a trustee by the court, and they will take on a few different responsibilities. This is the person that oversees the entire bankruptcy process and is often given the job to liquidate assets that are non-exempt and must be sold. In addition, they also will distribute money to creditors from those liquidated assets.
Reach out to a local lawyer if you have more questions about Chapter 7 bankruptcy law, or look a website like https://www.taylorcrockett.com/.