Why do people choose Chapter 7 Bankruptcy and some of its explanations
Bankruptcy has many different types, but Chapter 7 Bankruptcy is the most common type of bankruptcy filed by ordinary consumers. The case of Chapter 7 is easier, faster and cheaper than Chapter 13. The object of the submission of Chapter 7 is to get rid of all your debts without collateral, such as credit cards, and even most of the valuations.
If you file a bankruptcy case, you are a debtor. The purpose of the debtor is to obtain a debt that has been determined by the court to notify the debtor’s creditor that the debtor has fulfilled the requirements for filing a Chapter 7 case. Instead, the debtor no longer should pay certain debts. To be eligible for Chapter 7 bankruptcy, the debtor must be able to show that he really cannot afford to pay part of his debt. After all the necessary living expenses, such as rent or mortgage payments, food, clothing, car payments, insurance, and other daily necessities, there is no other income left to pay for credit cards and other unsecured debt.
Chapter 7 bankruptcy also requires that if a debtor has a valuable asset allowed in an exception, then the asset must be submitted for liquidation or sold to pay the creditor. Each state differs in the number of exceptions or limits on the value of assets saved in Chapter 7. For example, California, states that couples who are married under the age of 65 can own a home with no more than $ 75,000 of equity. Other exemptions include relatively low-value vehicles, household furniture, equipment, and other personal assets. The most protected asset in any state is an eligible pension account. Slightly different from Chapter 7 Bankruptcy Oklahoma, for example, maybe freed or protected in most circumstances.
In short, Chapter 7 bankruptcy gives debtors a second chance to be freed from unsecured debt. If the debtor has a valuable asset that exceeds the small amount allowed to be saved, then the asset will be taken and sold to pay something against the debt. If the debtor is sufficient to repay the debt, the debtor will not be eligible for the Chapter 7 disbursement. Likewise, if the debtor has valuable assets and does not want to take the risk of being taken or sold, Chapter 7 is not a good choice for the debtor.
In one of these unsecured debt cases, the debtor must consider bankruptcy Chapter 13, where the debtor is expected to pay what he can pay in addition to the cost of living for a period of 3 or 5 years. However, under Chapter 13, the debtor can keep all of his assets. Nothing is taken from debtors Chapter 13. In considering whether to file Chapter 7 bankruptcy or Chapter 13 bankruptcy, they should always consult with a competent Bankruptcy Attorney.