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Several types of Bankrutcy exist under Bankruptcy Code. Chapter 7 is a liquation proceeding that involves the collection and distribution to creditors of all bankrupt party's property by a trustee.
Why Would I File Chapter 7?
Most people file for Chapter 7 relief in order to get a "discharge" of their debts and have a "fresh start" in life. They no longer can afford to repay all their debts due to illness, unemployment, martial problems, unexpected medical expenses, over-extended credit or other large expenses. Not all debts can be discharged, however. For example, obligations to pay alimony, child support, and taxes that are less than 3 yrs old are non-dischargeable, or debt obtained by fraud.
What is the Chapter 7 Process?
Chapter 7 is called a liquidation proceeding. Each state has set a limit on how much property a debtor may keep after he/or she files for bankruptcy. Some states use the federal exemption law found in the Bankruptcy Code and others use their own state law. An Interim Trustee is appointed to adminster the case. He or she questions the debtor at a meeting of creditors to determine wheter the debtor has more property than the law allows. The vast majority of people filing Chapter 7 do not own more property the they are allowed to keep. Those who do own more than the bankruptcy law permits will have to turn over the non-exempt property to the Interim Trustee. The Trustee will then sell the property and use the proceeds to pay the debtor's creditors.
Will Bankruptcy Stop a Wage Garnishment?
Yes. Even some of the money may be returned. It depends on how much was garnished and when it was garnished.
Once you have filed your paperwork with the bankruptcy court, an automatic stay immediately goes into effect. This provision prevents creditors from making direct contact with you or staking a claim on any of your property from the day of filing forward.
Will Bankruptcy Affect My Job?
No. Bankruptcy law prohibts governmental and private employers from discriminating or taking any adverse action against a debtor because of the bankruptcy filing.
What Documents Will I Need In Order to File Bankruptcy?