Chapter 7 bankruptcy is the more common of the two types of bankruptcy. This is the form of bankruptcy that in effect discharges most, if not all, of the debtor's debts. Chapter 7 Bankruptcy is sometimes called liquidation, because it does require the individual to liquidate many assets before debts are discharged.
Under Chapter 7 Bankruptcy laws, certain property owned by the debtor is exempt from liquidation. This is determined based on state laws. However, most people who are filing for Chapter 7 Bankruptcy find that they have no assets to sell other than those that are exempt, thus allowing them to discharge their debts quickly.
New bankruptcy laws that became effective in October of 2005 made it more difficult to file Chapter 7 Bankruptcy. Under these new laws, only those individuals who made equal to or less than the median income for families of equal size in their states could file for Chapter 7 bankruptcy. Those who made too much would have to file Chapter 13.
If you qualify for Chapter 7, you will begin by filing the necessary documents with bankruptcy court. This generates an automatic stay, which means that your creditors have to stop collecting on your debts. Then, the creditors have to present their case to the bankruptcy court stating the reason why they need to be given the right to continue to collect their money. The trustee will pay creditors with any non-exempt properties.
The 341 meeting is the first time you will appear in bankruptcy court. At this hearing, the trustee can ask questions about your financial situation. Creditors can, but rarely do, question you as well. If no creditors have filed petitions with the court within 60 days of the 341 meeting, the debts that are considered dischargeable will be discharged. However, any debts you attained after filing bankruptcy will not be discharged. At this point you are done filing Chapter 7 Bankruptcy.
Do you want more information on Chapter 7 Bankruptcy Laws and how they can effect you? Than to find out the latest Bankruptcy Information head on over to BankruptcyDistrictCourt.com for everything you need.