Using Chapter 7 Bankruptcy Laws to Get Rid of Your Debts
Written by Shelby Riddenbach on October 13th, 2008Chapter 7 usually discharges more debts than other types of bankruptcy in accordance with chapter 7 bankruptcy laws. That means lots of debts are forgiven when a person files chapter 7 bankruptcy and creditors are forbidden from taking further collection actions against the debtors. However, the chapter 7 bankruptcy laws allow many exceptions.
Compliance is key when filing chapter 7 bankruptcy. A debtor must comply with chapter 7 bankruptcy laws in order to not have his or her case rejected, converted or dismissed. To comply with the chapter 7 laws, a debtor often hires a bankruptcy lawyer to help with filing and interpreting the complicated laws.
If the bankruptcy court finds it reasonable to issue a discharge order to release debtors of certain debts, creditors can have a say in the matter by filing complaints against the discharge decision of the court. If the creditors do not object to the discharge, the discharge order is often issued within a few months after the first meeting of creditors. The creditors can also file for more time to object.
Most chapter 7 filers receive discharge orders granted to them but that there are certain circumstances that the court would not issue a discharge. For example, if the court finds that the debtor is taking advantage of the chapter 7 bankruptcy system or actively and willfully transfer assets out of his or her name prior to filing bankruptcy to deceive the court and creditors, then the court will rule against the debtor.
If the debtor has secured debts, secured by properties such as a house or a motorcycle, then the creditors of secured debts can still claim the assets that were used as collaterals for the debts even after the discharge order has been issued. If a debtor wants to keep the assets that were used as collaterals, according to the chapter 7 bankruptcy laws, the debtor can reaffirm the debts to keep the assets.
Creditors are forbidden to harass the debtors once a discharge order has been granted. Secured creditors can collect the debts but unsecured creditors must stop all legal actions and harassment. If the debt has been sold to collection agencies, them too must stop all collection efforts after bankruptcy.
On top of secured debts, there are many types of debts that are exempt from the discharge under the chapter 7 bankruptcy laws. Examples of debts that will still need to be paid are alimony, child support, taxes and guaranteed loans. Chapter 7 bankruptcy laws are complicated and it is important to know which debts will be forgiven before filing.
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Tags: Bankruptcy
