Bankruptcy Chapter 7

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Chapter 7 Bankruptcy Laws Chapter 7 of the U.S. Bankruptcy Code is known as liquidation. This is the most common of bankruptcy filings and is sometimes referred to as “straight bankruptcy”. It may be used for individuals as well as businesses. Filing a Chapter 7 bankruptcy does not require to enter into a repayment contract. It does, however, require the debtor to nominate a trustee who will gather and sell nonexempt assets and the creditors will receive a portion of these assets in accordance with the U.S. Bankruptcy Code. If a petition for bankruptcy is submitted and dismissed due to the debtor not showing up for a court appearance or is not in compliance with the court, a debtor may not file for another chapter of bankruptcy within 180…show more content…
Abuse in this case means the debtor is filing for bankruptcy but may have income (from an annuity or other forms of cash inflows) that could be used to pay off some or all of the debt, in which case a Chapter 7 would be dismissed and a Chapter 13 bankruptcy would be recommended (repayment plan), although the debtor would have to wait 180 days after the dismissal to submit a new petition. Another reform that came with this Act was the requirement to give the creditor 90 day notice before declaring bankruptcy. A declaration of bankruptcy will generally stay on a debtor’s credit report for 10 years and may negatively affect the debtor’s request for credit lines. However, by the time the debtor has filed for bankruptcy, their chances for obtaining new forms of credit are already jeopardized by a ruined credit score. Therefore, creditworthiness is usually overemphasized in the decision to file for bankruptcy. When a business files for Chapter 7 bankruptcy, after a trustee is appointed, the trustee will sell the business’s assets and distribute the proceeds accordingly. In the event that a business declares bankruptcy, its employees may or may not lose their jobs because divisions of the business may be sold intact or…show more content…
American Bar Association. "'Straight' Bankruptcy: Chapter 7 ." American Bar Association. 20 Mar. 2008 <http://www.abanet.org/publiced/practical/bankruptcy7.html>. 2. U.S. Courts. "Chapter 7-Bankruptcy Basics." U.S. Courts. 20 Mar. 2008 <http://www.uscourts.gov/bankruptcycourts/bankruptcybasics/chapter7.html>. 3. Wikipedia. "Chapter 7, Title 11, United States Code." Wikipedia. 20 Mar. 2008
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