If you are buried in your debts and are concerned about your ability to recover and move on from this situation, you may be interested in learning more about Chapter 7 bankruptcy in California.
How Does Chapter 7 Bankruptcy Work?
The first thing you should do if you’re thinking about filing for bankruptcy is to set up a meeting with a lawyer. This is your chance to get your questions answered about next steps and to learn what’s required if you do file.
Chapter 7 bankruptcy is frequently referred to as the "fresh start" bankruptcy because it allows liquidation of all of your assets. A trustee would collect all of your assets and sell any of those which are not exempt.
After the assets have been sold, the trustee is responsible for paying you any amounts that are exempted. The proceeds of the liquidation are then distributed to creditors with the commission being taken by the trustee overseeing the distribution. There are certain debts that cannot be discharged in the Chapter 7 bankruptcy including certain taxes, child support, alimony, fraudulent debts, and student loans. In the majority of Chapter 7 bankruptcy cases, the debtor will have a large amount of credit card debt as well as unsecured bills in addition to very few assets.
What Happens to Your Debts in Chapter 7?
The majority of Chapter 7 bankruptcies allow a debtor to discharge and completely eliminate the majority of these debts. You may be eligible to keep certain secured debts such as your furniture, your home or your car by reaffirming those debts. In the event that you decide to move forward with the bankruptcy, it is important to understand all of your rights and responsibilities.