For business entities
Individuals can file for bankruptcy under this chapter. An individual is allowed to keep the exempt property and rest of his assets is utilized towards making repayments to the creditors. The rule as to what falls within exempt property varies from state to state. The trustee sells off the other non exempt assets of the debtor to repay the creditors. There are a few debts which are not discharged under the chapter, which include the debts like child support payments, student loans etc. One of the major drawbacks of filing a bankruptcy petition under Chapter 7 is that this stays on an individual’s credit reporting for 10 years from the date of filing. It has an impact on your creditworthiness.
Documents to be filed
Along with the Bankruptcy petition the petitioner is required to file the following:
•Schedules of assets and liabilities,
•Schedule of current income and expenditures,
• Schedule of “exempt” property,
•Statement of your financial affairs,
•Credit counseling certificate,
•Copy of debt repayment plan,
• Schedule of unexpired leases,
•Copy of the recent tax returns and tax returns filed during the case,
•List of exempt property etc.
Procedure & Discharge
After the Bankruptcy petition is filed, a trustee is appointed to deal with the case. The trustee would call a creditor’s meeting, the petitioner would be required to attend the meeting and answer the questions so put forth during the meeting. After the meeting the trustee would determine whether the case has been appropriately filed under Chapter 7 or is it an abuse of law. After the approval of the case as a Chapter 7 case the trustee would liquidate the non exempt assets of the Petitioner and pay off the creditors. After this the petitioner is discharged.
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