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Chapter 7 Bankruptcy Means Liquidation!

February 10, 2012 | Comments: 0 | Views: 115

Keep in mind that when filing chapter 7 bankruptcy, you are actually commencing a liquidiation process that you may not be able to readily stop. In bankruptcy a liquidation is simply the sale of your assets to pay creditors. The liquidation is conducted by the bankrutpcy court trustee who supervises your bankruptcy case.

Bankruptcy is commonly regarded to protect the person filing or the debtor. The "Automatic Stay" is in fact imposed immediately upon filing which prevents further collection activity from taking place.

However, The trustee of the bankrutcy estate is more mindful of protecting your creditor's interest by surveying the landscape of your possessions to identify anything of value that can potentially be liquidated.

The trustee is trained to dig deep and prevent abuse. In fact, the new bankruptcy laws, otherwise known as BAPCPA of 2005 (Bankruptcy Abuse Prevention and Consumer Protection Act of 2005) were created to reign in abuses that were undetectable before the new laws. The Meeting of the Creditors or "341 Hearing, is the trustee's opportunity to develop any suspicions of bankruptcy abuse.

The trustee can inquire not only of assets that you obviously have in your possession, but of assets that may "come your way" by means not so obvious such as a will, pending transaction, or even personal injury lawsuits in some instances.

In actuality, most chapter 7 bankruptcy filings do not result in a liquidation process but enough do that one should be concerned about. A chapter 7 bankruptcy case involving assets is called just that, a chapter 7 Asset Case. In some instances, a debtor with assets can seek a Reaffirmation Agreement, which would allow the debtor to keep a secured property as long as he/she could afford to do so.

Reaffirmation agreements require serious consideration and should not be submitted without understanding the full scope of the consequences.

Bankruptcy courts do offer state specific protections that vary from state-to-state. These protections are otherwise known "exemptions". Federal laws also offer exemptions and some states allow you to chose between both state and the federal exemptions.

These protections allow you to protect the equity in your home, the vehicle you have paid if full, cash on hand, a savings account, and your hosehold goods and furnishings.

A chapter 7 bankruptcy filing should be taken very seriously keeping in mind the trustee's true intentions.

When considering bankruptcy, one should always consult with an attorney for answers. If hiring an attorney is not financially possible, bankruptcy court does allow one to file bankruptcy without an attorney or obtain petition preparation services from a non-attorney.

Alex Frias is the publisher of, an information bankruptcy website for individuals an joint petitioners seeking to file bankruptcy without an attorney.

Alex Frias' bankruptcy petitioner services provides fully compliant bankruptcy assistance and is a Debt Relief Agency in accordance with the bankruptcy code (Title 11 USC).

Source: EzineArticles
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