How Does Chapter 7 Bankruptcy Work?

Persons generally resort to Chapter 7 bankruptcy to entirely discharge them of their debts forever. Individuals who qualify for Chapter 7 bankruptcy have demonstrated the court that they have no realistic way to pay their debts over the course of the next three to five years. The only way out to pay one's debts is for him to sell all of his possessions. But then again, with assiduous planning, a Chapter 7 borrower is rightfully exempted from having to recompense any unsecured debts, and most debtors are able to save all of their possessions.

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A Means test is employed to determine the Chapter 7 entitlement of a borrower. Chapter 7 bankruptcy will take approximately four months for it to be filed and discharged. The borrower will file an official petition at court, then give a statement of his monetary affairs, and schedules will be made. The borrower will compose a record of all his assets and debts, together with the lenders he owes money from. The borrower must not forget his property, debts incurred on the possessions and their current market values in the inventory. The debtor will then sign the listing. All the creditors and the borrower will arrange a meeting to note every debt and property the debtor has incurred.

The trustee will then look into the debtor's revenue if it's still sufficient to maintain his present standard of living. The debtor must give accurate and suitable data to the trustee. After which, the trustee and the creditors will determine if they will challenge the borrower of his entitlement to be discharged of his debts; this will happen within a two month period. If the lenders don't contest the borrower's discharge, the borrower will be discharged of his debts to the lenders.

For individuals who want a swifter and easier way out from their debts, they normally file for Chapter 7 bankruptcy. If you are having problems with paying your debts, you might consider filing for Chapter 7 bankruptcy.

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