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Monday, February 9, 2009

Bankruptcy Chapter Seven Exemption

By Sim Lewis

When debts are overwhelming, there may be only one alternative, which is to file for bankruptcy. There are many people who opts for Chapter 7 Bankruptcy. In this chapter, all your non-exempted assets will be sold or liquidated that should be an avenue to pay all your debts. The process is fully supervised, and the authority will appoint a trustee to get sales from all the non-exempt assets owned by the defaulter and appropriate the sales money to various creditors. Bankruptcy chapter 7 exemptions are assets that the courts will not touch when chapter 7 bankruptcy is filed. It is true that chapter 7 tend to help the debtors more and with with the exemptions in place, a debtor could have a chance to reduce their personal liability and you don't have to sell everything.

The debtor will review the state exemption list given to the debtor and learn which property to keep. This list is found in the Federal Bankruptcy Code. The debtor's property will be separated as exempt or non-exempt when a property exemption report is filed by the trustee. State exemption laws can vary from one state to another although some basic laws may be the same.

In paying off the debts, the secured debts are first to be in line. As for unsecured debts, there are possibilities that the creditors of unsecured debts may not get paid at all. The trustee is authorized to decide who gets the payment first, based on the law. One thing to note, if you want to file bankruptcy chapter 7 exemptions, the defaulter must file the case in the state where he/she resides for a period of 730 days before he/she can file for this type of bankruptcy. Or the debtor may also file the case in a state where he/she has spent most of the 180 period prior to the 2-year period.

There are also the Federal exemptions which will cover retirement benefits, death disability benefits, survivor's benefits and miscellaneous. You should find out more about the Federal exemptions because not all the states are the same.

Bankruptcy is probably the worst scenario, your credit score may take a major hit because of it. You will lose all your personal belongings and you need start all over again in your life. Remember that there should be other alternatives before bankruptcy.

If, unfortunately, you have no other options, then try to learn more about bankruptcy chapter 7 exemptions as you can reduce your personal loss and maximize the benefits of this law to pay off your debts fast.

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