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Reducing losses with Chapter Seven Bankruptcy
By plrprousers | May 10, 2009
When debts are overwhelming, filing for bankruptcy may be your only option left. Many people prefer file Chapter 7 Bankruptcy. This chapter involved selling all your non-exempted assets which will gives you an option to pay off all your debts. The process is fully supervised, and the authority will appoint a trustee to sell all the non-exempt assets owned by the defaulter and distributes between the creditors. Exemptions are properties that cannot be sold when chapter 7 bankruptcy is filed. Although chapter 7 is the debtor’s favorite method of bankruptcy, with the law of exemptions, a debtor could have a chance to lower their personal liability and keep some personal stuff.
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 be different from one state to another although some basic terms may be the same.
In paying off the debts, the secured debts are paid first. As for unsecured debts, there are possibilities that the creditors may not get the money in full. The trustee will pay the right creditors in the right amount. Note that to enjoy the benefits of bankruptcy chapter 7 exemptions, the debtor must file the case in the state where the debtor lived for at least 730 days before filing for this type of bankruptcy. Alternatively, the defaulter may also file the case in a state where he/she has previously lived for more than 180 days, up to 2 years.
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.
Yes, bankruptcy is not a good alternative and worst still, your credit score may take a major hit because of it. You will lose most of your possessions and you need start all over again in your life. Always keep in mind that bankruptcy should be your last option.
However, if in a worse case scenario, then remember to educate yourself about chapter 7 exemptions as your personal loss can be lowered to a minimum, and maximize the benefits of this law to pay off your debts fast.
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