Filing for Chapter 7 bankruptcy is a very serious matter.

You must consider a lot of things for you to arrive at a sound decision. After all, your final decision will greatly influence your credit standing.

Nevertheless, there are a lot of benefits in filing Chapter 7 Bankruptcy. You can free yourself from any credit worries. You will also reduce, if not totally eliminate, your debts. And most importantly, you can have a fresh start for you to rebuild your credit history.

Still, before taking this step, you must analyze if this type of bankruptcy really fits your situation. You also need to know much about the characteristics of this type of bankruptcy. This way you can be assured of enjoying the benefits that this option can provide you.

Now, allow us to discuss the features and some basic information about Chapter 7 Bankruptcy.

Features of Chapter 7 Bankruptcy

An individual or a business can file for Chapter 7 Bankruptcy. The court proceedings, for this type of bankruptcy, usually last three to six months.

This type of bankruptcy is otherwise known as liquidation. This is because your non-exempt properties will be taken and sold to pay off some of your debts. What is the meaning of exempt and non-exempt properties?

Under the state and federal laws, properties classified as exempt are the things you can still own even if you file for bankruptcy. These properties include your clothes, car, household furnishings, and others. Non-exempt properties on the other hand are those that will be taken from you. They will be sold to get enough cash to pay for your credit. Still, most of the people who file Chapter 7 Bankruptcy were pleased to learn that almost all their properties are classified as exempt.

In liquidation, all your unsecured debts will be totally erased from your credit information. However you will still need to settle non-dischargeable credit. Non-dischargeable debts are the obligations that survive bankruptcy. This means that you will still be required to pay them, as they are not covered under your unsecured debts. Non-dischargeable obligations are composed of alimony, child support, student loans, secured credit and tax debts.

Word of Caution

Despite the good features of Chapter 7 Bankruptcy, not everyone can be approved to get this debt option. If you have much disposable income to repay your debts, you will not be allowed to file Chapter 7 Bankruptcy.

If you want to file for bankruptcy, you must explain before a court why you are taking this step. You should present the reason why you will not be able to repay your debts now or in the future. Some of these reasons may be a recent job loss, a debilitating illness, or a mitigating reason that will prevent you from completely retiring your credit.

The new bankruptcy law also requires filers to undergo credit counseling. You can take this online or over the phone. This two hour credit counseling usually costs more or less $50. After taking this session, you should include your certificate of completion in the documents you will be presenting to the bankruptcy court.

We hope that this article enlightened your mind about the features and basics of Chapter 7 Bankruptcy.