About Chapter 7 Bankruptcy
By Lorna Mclaren
common type of Bankruptcy that is filed for is Chapter 7
Bankruptcy. This is a liquidation bankruptcy rather than
a reorganization bankruptcy. This means that assets will
be sold to clear the debt or debts.
It starts by the person in debt listing their assets.
With Chapter 7 Bankruptcy the debtor is allowed to keep
what is called "exempt" property. Examples of
exempt property are
# a certain amount of home equity
# a small amount of vehicle equity
# small allowance for clothing
# small allowance for other personal items.
The value of these exempt properties differs depending on
what jurisdiction you file for Chapter 7 Bankruptcy in.
A trustee will be appointed who will gather the debtors
assets ready for sale. The proceeds will then be
distributed to creditors according to priority. Even
after declaring Chapter 7 Bankruptcy there are some debts
that will still be require to be paid off. These are
called non-dischargeable debts and some examples are
# child support
# student loans
# DWI fines or penalties
Secured debts are those where the creditor has an
interest in the property of the person filing for
bankruptcy. It may be that the loan was used to purchase
the property. Secured debts take priority over
non-secured debts. If the sale of the property is
insufficient to repay the secured debt then the remained
of the debt becomes classed as a non-secured debt.
Non-secured debts are the last debts to be cleared off in
bankruptcy proceedings. They may even end up completely
discharged if there are not enough assets. This is what
happens in many Chapter 7 Bankruptcy cases. An example of
a non-secured debt is a credit card debt.
Lorna Mclaren has an
information and resources website at
http://www.123-debt-consolidation-loans.com where you can
find out more about the different types of Bankruptcy.
Article Source: http://EzineArticles.com/