Chapter 7 bankruptcy is a process that's designed to help people get out from under crushing debts. In particular, the process is intended for folks who fear they have no hope of ever paying down their debts, even if their obligations were restructured. If you're curious about whether it might be an option for you, here are some things every Chapter 7 bankruptcy services provider will tell their clients.
At its core, Chapter 7 of the bankruptcy code is about liquidating assets. That means as much of your assets as might be reasonable will be sold. The proceeds of the sales will go to pay off the debts, and once everything that's sellable is liquidated, then the remaining debts are canceled.
What Can You Keep?
The idea of liquidation sounds scary, and it can be. Note, however, the role that reasonableness plays in the law. For example, you'll still be able to retain a reasonable vehicle for getting to and from work and dealing with daily errands. The thing is that the court expects you to be reasonable about the vehicle. If someone has a sports car and a boring daily driver, the court is going to liquidate the sports car and leave them with the daily driver.
Documenting Everything You Own and Owe
One of the fastest ways to draw the ire of a judge is to not fully disclose all your assets. If you willfully do this, it can be interpreted as fraud. Everyone in the Chapter 7 bankruptcy services industry tells their clients to come clean about everything they own.
In addition, a petitioner should also fully document all of their debt obligations. If you fail to include a creditor in your filing, they can still come after you for those debts. Likewise, you won't be able to seek bankruptcy protection again for several years.
Consider Your Options
Liquidating most of what you own is a pretty radical step, and it's worth considering whether it's right for you. An alternative approach is to have the court set up a restructured debt with bankruptcy protection. You also may want to explore whether you can refinance your debts outside the system or directly negotiate with your creditors.
Similarly, the court will want proof that liquidation is absolutely necessary. This is accomplished by documenting your finances and showing that repayment of your outstanding obligations is impossible under your current circumstances.