What is Chapter 7 Bankruptcy?

Bankruptcy is a difficult process and something that is trying financially, as well as physically and mentally. But with a Chapter 7 Bankruptcy in Tacoma, it doesn't have to be the most difficult project and can indeed be a celebration of freeing yourself from the chains of debt that have surrounded you for years. Here is the process for filing for Chapter 7 Bankruptcy, and how to keep your cool during the process.

What Is It?

Chapter 7 Bankruptcy is a process that allows "debtors to get rid of most of their debts and start over with a clean slate," according to an explanation from bankruptcy.findlaw.com. Though it does help debtors who are in over their heads, it also comes with many negative aspects, including the loss of property and a terrible credit score. This type of bankruptcy is commonly referred to as liquidation, as some of your liquid assets are sold to pay back creditors or any other outstanding debts that you hold in your name. Some of these liquid assets can include your home (or any property that you own), automobiles, and other personal property that can be sold for a profit. And, keep in mind that these items will be sold as quickly as possible, so you may not fetch a great price for anything. But, the above assets can also be considered exempt and in most consumer cases, all of the assets are exempt. To file this type of bankruptcy, you must be eligible to file and the rules have changed significantly since 2005, making it a much harder process to go through.

Filing for Chapter 7 Bankruptcy

The process of filing can be very time-consuming, especially because you'll have to fill out the official petition, as well as any statements you have of your financial affairs. These forms include listing all of your assets and all of your debts, along with your financial history, according to moranlaw.net. These forms will also list your property and any debts related to your property. After you sign the forms, and file with the clerk where you live, then the process can begin.

Next Step

The first meeting of creditors is where everyone meets together (the debtor, creditors, and the trustee) and they can question the debtor, though they seldom do. After they meet together, they figure out which assets are not exempt, and the trustee will take control of those assets to sell and pay the expenses of the case and the creditors. Generally, the trustee will take care of most other things after this meeting. There is a 60 day period after this meeting where any creditor or the trustee can challenge the debtor's right to file for bankruptcy or even for a specific debt. And about 4 to 6 months after filing the case, debtors will receive their discharge.

Exempt vs. Non Exempt Properties

One of the most important things to know when filing for bankruptcy is to know what is exempt and what isn't exempt. For non-exempt property (property that might be sold to pay off debts), this can include the following:

• Musical Instruments (except if the debtor is a professional musician)
• Expensive Collections (coins, stamps, etc.)
• Family Heirlooms
• Cash, bank accounts, bonds, stocks, and other investments
• Seconds of anything (cars, homes, etc.)

Here are just some of the properties that are exempt from liquidation:

• Cars
• Home goods, furnishings, and clothing (reasonably necessary)
• Household appliances
• Pensions
• Jewelry (only up to a certain value)
• Tools of a debtor's trade
• Pensions
• Equity in their home
• Public benefits
• Damages from personal injury
• And more.

Overall, the best way to determine a good process for bankruptcy and to determine what you should do in your financial matters is to consult an expert in Chapter 7 bankruptcy in Tacoma.  

Source : articlesbase.com