The most common type of bankruptcy that is filed is a Chapter 7 bankruptcy. Chapter 7 bankruptcy is known as the “fresh start” or “liquidation” bankruptcy because most of your unsecured debt will be wiped away while some of your assets may be sold (liquidated).
To find out if you qualify for a Chapter 7 filing, call me today at The Pittsburgh Tristate Bankruptcy Firm. We will review your financial situation, take a look at your assets and debt, and find out if you meet the criteria of a “means test”. If, in the event you do not meet the criteria for Chapter 7 bankruptcy, you may still be able to file for Chapter 13 bankruptcy. A Chapter 13 bankruptcy typically entails restructuring your debt in order to setup a payment plan.
Details of Chapter 7 Bankruptcy
When filing for bankruptcy it is important to understand all aspects of the process. Before undertaking the complicated task of filing by yourself when your assets are at stake, call me, your bankruptcy attorney.
Relating to Business
Businesses in severe financial distress may file for bankruptcy under Chapter 7 (liquidation). Once filed, the business must stop all operations and a Trustee is appointed to analyze the business’ finances. Sometimes, the Trustee might authorize the business to continue operations. The job of the Trustee is to sell off the debtors nonexempt assets in order to pay off the creditors. Chapter 7 bankruptcy does not necessarily mean that all employees of the business will lose their jobs. However, if employees do lose their jobs the court allows for some type of wages to be paid during the bankruptcy process. The Trustee must follow a hierarchy of payments outlines by the Bankruptcy Code. One of the highest priorities for payment include claims for wages or pay, salaries, and commissions.
After the assets have been liquidated and payments made, in most cases the business is inoperable without the means to continue. If all of the creditors are paid in full after liquidation, the stockholders will then be notified of the Chapter 7 bankruptcy and are then able to file claims for anything that is leftover.
Relating to Individuals
If you reside, own property, or own a business in the United States you may file Chapter 7 bankruptcy. You may not file if you have had a bankruptcy dismissed within the last 6 months or if you have received a bankruptcy discharge in the last 6 to 8 years. Or, depending on your debt, income, and expenses, you might be able to complete a Chapter 13 repayment plan.
Under Chapter 7 bankruptcy, an individual is permitted to keep some exempt assets which varies by state. The Trustee will sell the other nonexempt assets to pay the creditors. After the creditors are paid, most types of secured debt will be “discharged” or wiped out. The types of debt that are not discharged include: child support, income taxes less than 3 years old, court ordered fines and/or restitution, property taxes, and student loans. Chapter 7 bankruptcy remains on one’s credit for 10 years.
Filing for Chapter 7 bankruptcy can be a complicated matter. Don’t go into it without the proper representation. Call The Pittsburgh Tristate Bankruptcy Firm at 1-844-748-8384.