What Happens With A Chapter 7 Bankruptcy

When you file a chapter 7 bankruptcy, you are going to liquidate any assets that you have that are not exempt from a sale. The bankruptcy will include all unsecured and secured debts. In most cases, the debts are forgiven and you will owe nothing more on those debts. The items that the trustee sells for money will help pay a small portion of what is owed to creditors. Very rarely are creditors paid what they are owed. That is why some creditors do not discharge the debt owed.

After a chapter 7 bankruptcy filing, you will need to submit the proper documents as well as a list of all non-exempt property that can be sold to pay towards your debts. You will supply a list of living expenses, a list of creditors, any income you may have and a list of your property. You will need to supply tax papers, bank statements, pension and 401K plans and any titles or deeds to vehicles and property.

After filing the chapter 7 bankruptcy, you will sit down with the trustee and creditors. After answering any questions that the creditors have, the trustee will arrange to take all property that is free of any liens and auction it off. If you conceal or sell any property that could be sold by the trustee, a creditor can refuse to discharge a debt. Debts can also be denied discharge if you lie or fail to explain truthfully, why you could not pay the debt.

When you file a chapter 7 bankruptcy, you need to disclose everything and offer only honest answers to all questions. If a debt is not discharged for some reason, you will still be liable for that debt. The debt that was not discharged cannot be discharged in future years if you file bankruptcy again.