March 16, 2010
File Chapter 7 And Know the Bankruptcy Code
Since the passing of the 2005 BAPCPA bankruptcy code the majority of people that have been filing for Chapter 7 instead of 13. There is no incentive to file a Chapter 13 bankruptcy case since the mortgage modification legislation in Congress has not been passed. Many people may be waiting to file bankruptcy under Chapter 13 until they find out if they can save their homes in Chapter 13. Right now the best option for everyone is to file chapter 7, as long as they qualify. If the Senate passes a bill so that mortgage modifications will be allowed and Chapter 13 bankruptcy cases, it would be interesting to see if the rate of Chapter 13 filings increased.
The Chapter 7 bankruptcy is ideal for those who have a large amount of unsecured debt. In a Chapter 7 bankruptcy, the trustee gathers and sells the debtors un-exempt assets and uses the proceeds to pay off some of the creditors. The remaining debts are subject to be discharged. This does not mean that you will lose all of your possessions. All states have exemptions that allow you to keep certain assets. In many cases you will not lose any of your possessions. Do not assume you will lose your possessions just because you file for bankruptcy. Don’t think bankruptcy was created to take away everything you own. Bankruptcy was created by Congress to help people get back on their feet with a second chance. This fresh start allows entrepreneurs to take risks knowing that if they fail they will have a way out.
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