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Is Chapter 7 bankruptcy right for you?

March 20, 2014 by · Leave a Comment 

Chapter 7 of the Title 11 of the United States Code is the most common form of bankruptcy in the country. Many call it the bankruptcy code. It provides for a liquidation process for individuals, individual who own a business and property to file in Federal court for “straight bankruptcy” or liquidation of most types of unsecured debt. The US residents can file for relief in federal court under this provision.

In a Chapter 7 filing, individuals are allowed to keep certain properties such as exempt properties but a property with a lien such as a mortgage is not. Unsecured loans can be easily discharged by the court. However, child support, income taxes less than three years old, student loans, property taxes, and fines imposed by a court are not be discharged by a Chapter 7 filing. A Chapter 7 bankruptcy can stay for 10 years in a credit report (compare this to Chapter 11 bankruptcy that stays only for seven years). Those who want to significantly lower the debt payment may consider Chapter 13 filing instead of Chapter 7 bankruptcy for total debt wipeout. Chapter 13 can also help to bring the mortgage payments current if you are in a foreclosure and save your home.

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