Chapter 7 bankruptcy rules
Chapter 7 Bankruptcy law is the most common law in United States in bankruptcy cases. This rule governs the liquidation process under the United States of Bankruptcy laws. Chapter 7s real meaning is that a business gets shut down unless and until a chapter 7 trustee continues it.
Eligibility for filing Chapter 7 Bankruptcy law
For filing chapter 7 bankruptcy one has to be a company, an individual or a small business. Either of these will give one eligible criterion for filing a bankruptcy under US government. One cannot file a bankruptcy if his last bankruptcy case has been dismissed by the court under the law. The bankruptcy case is also not considered if the case is fraud or an attempt to abuse the law of bankruptcy.
Working of Chapter 7
A debtor files a petition in the bankruptcy court in the area where the debtor lives or where the business of the debtor is serving. There are a few things one has to submit which must be attached with their filings which are mentioned below :
- The debtor must have all statements of his financial affairs.
- Each and every document about the assets and liabilities of his business has to be submitted.
- Papers of his unexpired leases and executory contracts are required to be submitted.
- He has to submit a schedule of his expenditure and all his information about his current income.
- He must submit a tax return transcript.
- List of all his creditors and nature of the claim
which is made by the creditors with the total amount of claim.
Court charges $245 as a case filing fee, a $15 fee for the trustee surcharge and $39 as a miscellaneous administrative fee.The total number of installments is limited and the debtor has to make the final installment before the completion of 120 days from the date of filing the case. After chapter 7 is discharged, the record of bankruptcy remains for 10 years from the date of discharge and remains for life on the public record.
Discharging of Chapter 7
Discharge of chapter 7 means releasing the debtor from the liabilities of personal assets. It also prevents the creditors from taking any collections from the debtors. This discharge is subject to many exemptions. 99% of the cases are basically discharged in the court under the law of chapter 7.
Trustee of chapter 7
A trustee is a person who is assigned by the court itself to look after the case and see that there is no fraud or abuse present in the case. They also collect maximum number of assets from the debtors for paying back the creditors for the amount of money that they are credited with. A trustee can also make further investigation in the case for hidden information about the debtor.
Advantage of filing a Chapter 7
Creditors will stop harassing the debtor because after filing under chapter 7, the law says that the creditors cannot ask for payments even over telephone. Creditors cannot file any kind of law suit on the debtor. The stay on the bank loans will get lifted if one is not able to pay the money.
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