Many people have asked what is chapter 7 bankruptcy and the simple answer would be that this particular legal proceeding might be the most drastic of the measures a debtor can take to be discharged from crushing personal debt. This is the action that most people think of when the word bankruptcy might be mentioned. Images of auctioneers selling off all of a family's possessions while the family sits on the porch watching memories being sold. In the old days this measure might have brought up phrases like "debtor's prison" or "becoming homeless." Its still a drastic action, but the absolute doom and gloom of old need not necessarily accompany such a decision.
For sure, the question of what is chapter 7 bankruptcy must first be answered with the word failure. This legal action would be the result of someone failing to handle credit reponsibilities, either of the self inflicted version or because of circumstances compeltely out of the person's ability to change. The first cause of having to file this dissolving of assets can be related to the inability to handle to privilege of credit. Reality says that many people have succumbed to the temptation of trying to live above their income level by relying on credit as the vehicle to take them to that next level. As the debt increases and the payments on those monthly bills never stop, living paycheck to paycheck becomes a reality and soon a large unexpected circumstance arises where there can be no more money on which to live and the decision comes down to eat or feed the creditors. The second reason may simply be an horrific medical expense not covered by insurance that totally wipes out a person's ability to pay.
When asking what is chapter 7 bankruptcy, the answer must also include the accompanying feelings of shame, loss, and perhaps guilt at walking away from promises may to creditors to repay a loan. For many, filing this legal action brings on so many emotional issues that a counselor may be needed both before and after the action is taken. This can be the reason that one of the requirements for filing is for the debtor to receive counseling from a court approved professional before the process begins. If the question has been asked "What is chapter 7 bankruptcy and what can it be compared to, the answer is the emotional effects of bankruptcy on a person or a family have often been likened to that of the effects of divorce. Anger, blame, resentment, questioning and deep remorse can often plague those seeking this particular legal process and these feelings can last a very long time.
The question of what is chapter 7 bankruptcy can be answered with the word dissolution. This legal proceeding will be the dissolving of a person's assets to repay creditors. And no one should be fooled by the TV attorneys that promise that a person won't lose their house in a chapter seven proceeding. Anyone considering such a legal move should investigate the bankruptcy laws in the state where he lives. There are a minority of states that allow filers of this motion to discharge debts and be able to still live in their homestead. Each debtor filing this legal action can have certain items of property exempted from the trustee's order to sell a person's belongings for debt reduction. However, some states allow as little as four thousand dollars equity to be kept in a house while just a very few don't allow a house to be touched. In most states, very specific possessions are mentioned as being exempt, but the amount of the property exempted can be small and basically the debtor has to start over again.
If the reader is contemplating this action and wondering what is chapter 7 bankruptcy, know that the filing of this legal motion does not end on the day that property will be taken and one must begin again. The debtor will have to wear the scarlet "B" on his credit report for ten years. This proceeding means that the reality of getting loans again during this ten year period will be very difficult and if a person can secure a loan, the interest rate will be astronomical. The person filing this legal motion must understand that the luxuries of life that were bought with credit will not be available the way they were before the bankruptcy. Life really will be different. And if a student has the idea that once all of college has been paid for by federal student loans and the degree has been granted and throwing the mortarboard means also that those loans can be thrown away through chapter seven bankruptcy, think again. Taxes and student loans already against the debtor cannot simply be swallowed up with the gavel of a judge.
What is chapter 7 bankruptcy? Its an opportunity to stop and really figure out life's priorities. Its a chance to decide what will be really important in life and make changes to perhaps live a more simple life. This legal action is an opportunity to find out just how tough a person can be to survive one of life's most difficult periods. What is chapter 7 bankruptcy? Its an opportunity to discover God's great love. "But God commendeth his love toward us in that while we were yet sinners, Christ died for us." (Romans 5:8) Going through bankruptcy doesn't make a person a failure; rather it just means that he's human.
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