Chapter 7 bankruptcy

Bankruptcy is a legal life line for people drowning in debt. Consumers and businesses petition courts to release them from liability for their debts. In a majority of cases, the request is granted. Bankruptcy is a legal process that allows individuals or businesses who are unable to repay their debts to seek relief through court-supervised reorganization or liquidation of assets.

It provides a fresh financial start while ensuring fair treatment of creditors, but experts say it should be a last resort to settle your financial woes. A good indication that it may be time to consult a bankruptcy lawyer is feeling overwhelmed by your financial situation. Everyone's financial journey is different, and your personal limits for stress and hardship should guide your decision.

Being smart about your options and exploring your choices are more important than being embarrassed or ashamed. Bankruptcy gives creditors an opportunity for repayment when assets belonging to an individual or business are liquidated. All bankruptcy cases are filed in federal court. A decision can be made to discharge, meaning the debtor is no longer liable to pay those debts.

Or the judge could dismiss the filing if he or she believes the individual or business has the means to pay their debts.

How bankruptcies work

Filing for bankruptcy can be a saving grace for people drowning in debt. The numbers support that contention. The American Bankruptcy Institute says that There are six types of bankruptcy — Chapter 7, 9, 11, 12, 13 and 15 — each designed to address different financial situations. Chapter 7 and 13 are by far the most common types of bankruptcy, accounting for