The Bankruptcy Code Protects You In A Bankruptcy Filing
March 4, 2010 7:08 pm BusinessWhen you’re looking into filing bankruptcy there are some differences between the chapters you need to know. The difference between a Chapter 7 bankruptcy and a Chapter 13 bankruptcy case, is that Chapter 7 does not involve the filing of a plan of repayment as in Chapter 13. Instead, when you file Chapter 7 the bankruptcy trustee gathers and sells the debtors nonexempt assets and uses the proceeds of such assets to pay the holders of claims, the creditors, in accordance with the provisions of the bankruptcy code. Part of the debtor’s property may be subject to liens and mortgages that pledge the property to other creditors. In addition, the bankruptcy code will allow the debtor to keep certain exempt property.
A chapter 7 bankruptcy begins with a debtor filing a voluntary petition, schedules of assets and liabilities, schedules of income and expenditures, and other related documents. The debtor is also required to provide a copy of their most recent tax filing, the proof of income, sometimes your bank statements and proof of meeting the pre filing credit counseling requirement. If you hire a professional, such as an online bankruptcy service, they will walk you through all these requirements. Married couples may file joint petitions if they desire. Immediately upon the actual bankruptcy filing the automatic stay takes effect. This is a temporary injunction that stops all collection attempts, repossessions and foreclosures, and all creditor harassment. The automatic stay is taken very seriously by the court. Creditor violations of the automatic stay may be acted on by your attorney and may result in damages paid to you.
