Chapter 7 Bankruptcy - Advantages and Disadvantages!

A Chapter 7 Bankruptcy is a "personal bankruptcy" used by individuals and businesses to eliminate most of their unsecured debts. This is limited by certain exceptions in each state.

A Chapter 7 involves the total liquidation of all assets (again, except those exempt by certain states). All non-exempt property must be turned over to the bankruptcy trustee (whether it is the cause of the debt or not) for liquidation.

A person or a business can file a Chapter 7 once every six years and the process takes about four months to complete.

A lawyer is not necessarily needed for a Chapter 7 bankruptcy and it can be done by yourself with a bankruptcy kits, but may require an attorney if you need help.

Advantages of a Chapter 7:

1. The liquidation of assets usually pays for most if not all of the debts owed.

2. A Chapter 7 is an easy process and less expensive (ie. no attorney costs).

Disadvantages of a Chapter 7:

1. You lose most if not all of your assets (ie. car, house, boat...).

2. If all of your debts aren't paid by the liquidation, you may still owe debt which can lead to additional judgments or collection activities after the bankruptcy is complete.

If you apply for a Chapter 7 and make more income than the median income for your state, you may be forced to file a Chapter 13 bankruptcy.

If feel you may need to file a Chapter 7 bankruptcy, don't file just yet! If you are not yet in the foreclosure process but fear you are heading in that direction, or you feel your debts are out of control, I highly recommend checking out CuraDebt (for personal debt) or CuraDebt (for business debt). CuraDebt is a debt counseling company specializing in helping businesses and consumers eliminate their debt and resolve their financial problems that result from hardships such as unemployment, medical problems, death in the family, and divorce - all in all, helping you avoid bankruptcy.

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