How to File Chapter 7 Bankruptcy

Bankruptcy is a very stressful situation that some individuals undergo. Bankruptcy means a situation of financial insolvency. The laws relating to bankruptcy are extremely complicated, very difficult to understand and comprehend. However, before we proceed to the concept of Chapter 7 bankruptcy, let us first try to understand the meaning of bankruptcy itself, and the different types of bankruptcy laws and provisions.

The situation of bankruptcy is often defined as a financial status, where the monetary value of assets is less than that of liabilities of a person. A person or a corporation can file for bankruptcy on his or its own accord. In some cases, the creditors of a person or corporation can request him or it to file for bankruptcy.

Chapter 7 Bankruptcy

Chapter 7 bankruptcy is defined in the Title 11 of United States Code. The Title 11 is a provision in the United States Code, that governs all bankruptcy proceedings, and is also known as the bankruptcy code. The Chapter 7 of Title 11, prescribes the procedure of liquidation of assets in case of a Chapter 7 bankruptcy. This type of bankruptcy, which provides for the liquidation of a person's assets, can be better understood with the help of the following points.

• Chapter 7 bankruptcy facilitates the total liquidation of a person's, pledged and non-exempt assets.
• This kind of bankruptcy can be filed for by any qualifying individual or corporation.
• Individuals have to pass a Chapter 7 bankruptcy means test in order to qualify for government aid or bankruptcy assistance, in accordance to the Bankruptcy Abuse Prevention and Consumer Protection Act, October 17, 2005.
• The liquidation proceedings are regulated and monitored by local Federal Courts, by the appointment of a qualified liquidator (also referred to as the trustee in some cases).
• The debts are discharged with the help of proceeds from liquidation of assets.
• The exempt assets include tools of trade and commodities that are classified as 'basic necessities'.
• The person who has filed for the bankruptcy, may or may not appoint a representing bankruptcy lawyer.
• The person who has filed for bankruptcy, is eligible for a fresh start, in terms of credit rating, credit scores and may avail after bankruptcy services such as bankruptcy credit cards and bankruptcy loans.

How to File Chapter 7 Bankruptcy?

• Filing for Bankruptcy without a Lawyer: There are several different methods with the help of which one can file for a Chapter 7 bankruptcy. Many individuals who cannot afford the services of a bankruptcy attorney, can file for Chapter 7 bankruptcy without a lawyer. This can be done with the help of Federal Bankruptcy Forms, Bankruptcy Software and Bankruptcy Preparer.
• Filing for Bankruptcy On Your Own: The best way to file for Chapter 7 bankruptcy is to first take a means test. Often, it so happens that a person can easily avoid bankruptcy with the help of debt settlement, debt management, or debt consolidation loans, which are some very good bankruptcy alternatives. A means test often helps a person to make up his mind in this regard. In case one wants to petition for a Chapter 7 bankruptcy, it is necessary to obtain bankruptcy forms from the local Federal bankruptcy courts. You may also consult a paralegal for bankruptcy advise. Another provision that one must note is to apply for government aid and bankruptcy exemptions in case if you qualify for any.

If done properly, you might successfully walk through the phase of Chapter 7 bankruptcy. There are some very important points that you may follow.

1. Try and evaluate the market value of all your valuable assets.
2. If possible, you may also try to sell off as many assets as possible at the highest possible market value.
3. Consult a paralegal, lawyer or attorney if possible. You may also hand over the power of attorney.
4. Lastly, after the proceedings are over, get back to improving your credit rating and scores with the help of simple means.

In most cases, filing for Chapter 7 bankruptcy results in discharging of debts. This does not necessarily eliminate lien on the property, moreover some debt types are also not discharged.