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Important details about filing for bankruptcy

26th December 2020 Print

Claimants have a suitable solution if they are facing overwhelming debt that will not take a long time to complete. With chapter 7, the claimant can use assets to pay off the debts and get a little money for exemptions. It is an effective solution for anyone facing foreclosure or repossession that need an effective way to reduce their debt volume and improve their credit. They will have to pay the court costs for starting the claim, but they will not face any additional out of pocket expenses. Chapter 7 presents a shorter version of bankruptcy that is completed in a shorter time than chapter 13.

Collecting Details About Their Debts

Chapter 7 bankruptcy presents a solution to high volume debt and allows the claimant to settle their debts by selling assets through the court. It is a shorter version of bankruptcy, and the court will not take over the claimant's life in the same way as in chapter 13. The claimant can pay off as many debts as they would like and present all their details to their attorney when starting the claim.

The claimant starts by comprising a list of all their debts including the balance, the creditor, and its current status. If they are facing foreclosure or repossession, the bankruptcy claim offers a temporary fix until they can either pay off the debt or catch it up to avoid the loss of the assets. The automatic stay lasts throughout the full bankruptcy claim, and the person will not face any legal action by their creditors until the case is discharged by the court.

When assessing the debts, the court may discharge some of the debts such as unsecured credit card accounts. The claimant must complete all the steps of the bankruptcy to ensure that they do not face an early discharge, and they will eliminate debts that the court chooses to discharge. Once the court discharges a debt, the creditor cannot take any action against the consumer to collect any of the balance.

A Review of the Claimant's Assets

The claimant's assets are reviewed for the chapter 7 case, and the court decides what assets are sold to generate funds to pay off the debts. The court will review the title and deeds for all the assets and get an appraisal for the assets. The court assigns a trustee to manage the assets and determines how to sell the assets to get the most profits.

When Starting the Chapter 7 Claim

With chapter 7, the claimant approaches an attorney and explains what they are facing financially, and the attorney reviews the details. The claimant must pay a fee to get the claim started, and the court must approve the bankruptcy before the claimant gets started. They must provide all titles and deeds for their assets to the court when starting a bankruptcy claim.

How the Trustee Manages the Claim

A court-appointed trustee reviews the assets and sets up the most appropriate option for selling them. For instance, some assets are sold to investors directly, and others may be sold through a public auction. The trustee determines what strategies can generate the most proceeds for the case, and they will sell most assets to the highest bidder. Once the money is collected, they submit payments to the creditors to pay off the debts and eliminate them from the claimant's credit history. Their credit history is updated after each debt is paid, but the bankruptcy can remain on their credit for at least 10 years.

The Duration of the Bankruptcy Claim

The bankruptcy claim under chapter 7 lasts up to six months, and the claimant must wait for the claim to be completed according to the court's specifications. Some cases may take as little as three months to complete depending on how quickly the assets are sold and the money is sent to the creditors.

The claimant will not have to complete a bankruptcy that lasts up to five years as they would with chapter 13. The claimant doesn't have to take any further action once their assets are released to the court. Any exempted values for the assets are sent to the claimant.

Can They Acquire New Assets?

After the claim has started, the claimant can acquire new assets as they are protected under bankruptcy laws. The consumer won't have to worry that the court will seize the new assets since they were not included in the bankruptcy claim. They can rebuild their estate once the court has approved their claim and seized the assets listed in the claim.

A Clear Slate for the Claimant

The bankruptcy chapter may provide the claimant with a clean slate and improved credit once the bankruptcy falls off their credit report. It is the fastest way to settle debts and eliminate imperfections on the credit history. Any debts that were discharged in the bankruptcy are no longer the responsibility of the claimants.

Rebuilding the Credit After Bankruptcy

The claimant will follow steps after they have completed bankruptcy to rebuild their credit and get the most out of the bankruptcy. They can start new lines of credit after they are finished with the bankruptcy and have paid off their creditors. After the bankruptcy is no longer on their credit report, the claimant will see a major change in their credit scores, and they can get a better handle on their finances. This is a faster way to improve their credit without having to spend more money out of pocket. They use their assets to complete the task.

Bankruptcy is an effective way to settle debts and avoid legal action by creditors. The claimants approach an attorney when they are ready to get started. The claim requires all the deeds and titles for their assets, and the court decides what assets are sold to pay off the debts. The action takes up to six months to complete, and the claimants won't face as many restrictions as they would if they filed for chapter 13. Chapter 13 is completely different and requires the claimant to enter into a repayment plan. With chapter 7, the court sells assets, and the claimant's debts are paid off.