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Learn About Chapter 7 Bankruptcy

The chapter of the Bankruptcy Code providing for "liquidation," ( i.e., the sale of a debtor's nonexempt property and the distribution of the proceeds to creditors.)

Bankruptcy Process

The procedural aspects of the bankruptcy process are governed by the Federal Rules of Bankruptcy Procedure (often called the "Bankruptcy Rules") and local rules of each bankruptcy court. The Bankruptcy Rules contain a set of official forms for use in bankruptcy cases. The Bankruptcy Code and Bankruptcy Rules (and local rules) set forth the formal legal procedures for dealing with the debt problems of individuals and businesses

The advantages of bankruptcy

The key benefit of bankruptcy is the discharge of debts, which enables a debtor to start over with a clean slate. However, there are many other advantages, including protection of property and an automatic stay.

Discharge of most debts
The principal goal of most bankruptcies is to have most unsecured debts discharged. The bankruptcy discharge totally eliminates any personal obligation to pay many types of debts. (A few types of debts are not dischargeable. Also, if a creditor has a lien on property taken as collateral, the debt owed to that creditor may still have to be dealt with after bankruptcy because the lien will, in some cases, survive.) For most debtors, bankruptcy is a relatively quick and easy way to end the creditor harassment, hardship, anxiety and marital stress normally associated with debt overload.

Bankruptcy: An Overview

Bankruptcy law provides for the development of a plan that allows a debtor, who is unable to pay his creditors, to resolve his debts through the division of his assets among his creditors. This supervised division also allows the interests of all creditors to be treated with some measure of equality. Certain bankruptcy proceedings allow a debtor to stay in business and use revenue generated to resolve his or her debts. An additional purpose of bankruptcy law is to allow certain debtors to free themselves (to be discharged) of the financial obligations they have accumulated, after their assets are distributed, even if their debts have not been paid in full.

How Bankruptcy Works

Bankruptcy is one of the most complex areas of law, incorporating elements of contract law, corporate law, tax law and real estate law. In recent years, several high-profile corporations like Enron, WorldCom and Adelphia have filed for bankruptcy. Although businesses only accounted for about 2 percent of all bankruptcy filings in the United States last year, commercial bankruptcies can have a big impact on the economy because there can be a lot of money at stake [ref].

Flawed mortgage modifications lead to bankruptcies

Federal mortgage modification programs aimed at keeping financially at-risk homeowners from being foreclosed on are instead fueling consumer bankruptcies in Florida, according to several housing experts.