In Chapter 7 Personal Bankruptcy, debtors clear their debts and have a fresh start. Alimony, child support, fraud debts and some items cannot be discharged.
ALLENTOWN, PENNSYLVANIA, USA, Jan. 30, 2022 /EINPresswire.com/ — In a Chapter 7 personal bankruptcy, debtors erase their debts and start fresh. Chapter 7 bankruptcy is a liquidation where the trustee collects all non-exempt assets from the debtor and sells them. In most Chapter 7 cases, the debtors do not have any assets that are not exempt, and therefore the trustee will not sell any of the debtor’s assets. If the debtor has non-exempt assets, the trustee will sell them and pay them the proceeds. The amount remaining after that is then distributed to the creditors with a commission levied by the trustee who oversees this process.
Alimony, child support, fraud debts, certain taxes, and certain billed items cannot be discharged in a Chapter 7 bankruptcy. (see Pennsylvania Exemptions) In the vast majority of cases, people who file the balance sheet will have significant credit card debt and few assets. In a Chapter 7 personal bankruptcy, all debts are erased.
Debtors can reaffirm secured debts such as their car, furniture, or home by signing a voluntary “reaffirmation agreement.” This decision does not cancel the debt, but it prevents it from being in default and allows debtors to repay a lower amount over a longer period. If the debtors decide they want to keep their house, car, or furniture and reaffirm the debt, the debtors cannot declare bankruptcy on that debt for six years. If the debtors want to reaffirm the debt, they will have to update it. If one is a little more than three or four months late, then one will have to repay those past payments in order to reaffirm their contract. This is essential for its continued commercial presence. Although it can be difficult to pay off the high balances of the most expensive assets, it can be mentioned that they want to keep certain assets such as their place of residence and their furniture, as well as certain less valuable assets such as cars or jewelry.
Once a confirmation agreement is filed with the court, it can be canceled at any time before 60 days have passed, or if the judge orders that an agreement be canceled.
When filing for personal bankruptcy, most people cite medical bills, excessive credit card debt, job loss, or divorce. These events cause not only financial hardship, but also emotional strain. If someone is struggling to pay their bills, it is important that they explore all possible solutions to ensure that the one they decide on will work in their favor in the long run.
If a person cannot repay their debts, federal bankruptcy may be an option for them. It is worth researching to learn more about the main features of this law and how it applies to your own situation. It is generally recommended to consult an experienced bankruptcy attorney if considering filing for personal bankruptcy. There are also online services that offer bankruptcy assistance, but their expertise varies. If a person decides to file for bankruptcy on their own, the process could be confusing for them. Speak to an expert before starting bankruptcy formalities.
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