Chapter 7 Bankruptcy Definition

When it comes to claiming bankruptcy, without a doubt the most common method is by filing a claim under Chapter 7. But what does filing a Chapter 7 bankruptcy claim mean exactly and what is the Chapter 7 bankruptcy definition? In technical terms -

Chapter 7 bankruptcy is a consumer bankruptcy proceeding in which a trustee liquidates the assets of the debtor to pay back the debtor’s creditors. At the conclusion of a Chapter 7 claim, the debtor is cleared of most of their debts.

Perhaps the most significant reason that Chapter 7 has become so popular is that it’s one of the only debt relief options that allows a debtor to completely eliminate a large portion of debt within a relatively short time period – about 6 months. Of course, not everything about the bankruptcy process is positive and there are several things that must be considered before a debtor decides to address their debt concerns through the bankruptcy process. Some of the most significant consequences of filing bankruptcy are listed below –

• Negative Impact To Credit Rating – many debtors know that bankruptcy will negatively affect their credit rating, but most do not know that such negative effects can last up to 10 years while the claim remains active on their record. A low credit score can make it difficult for people to obtain financing, to rent a home or even to secure employment under certain circumstances.

• Filing Bankruptcy Costs Money – despite what you might have heard, filing bankruptcy isn’t free. Although you can certainly save some money by filing a claim on your own, you likely won’t get past the court-mandated $300 filing fee. Plus, if you’re like most people and you decide to hire an attorney to assist with your claim, you should plan on shelling out between $1,000 and $1,500 for reputable legal assistance.

• Filing Can Be Stressful – whether you plan to file on your own or not, filing bankruptcy can be extremely stressful and often times embarrassing. Coming to terms with financial challenges is never an easy process and the stress can be made worse if you elect to file on your own.

Now that you know the Chapter 7 bankruptcy definition, it’s time to learn more about whether or not filing a claim is the right option for you. Fortunately, we have all the information and advice you need right here within our comprehensive site. We also have a Chapter 13 bankruptcy definition if you’re interested in retaining your assets through the claims process. We even offer a free bankruptcy evaluation that can be used to determine if filing is the right course of action given your unique circumstances.

Click on the following link for a list of the pros and cons of bankruptcy Chapter 7.