The bankruptcy of Chapter 7, which is often called direct bankruptcy, is when the debtor goes to court and requests that their unsecured debts be discharged. In a Chapter 7 bankruptcy, the debtor will be responsible for paying for their own car and any other insured property they wish to keep. But they are asking the court to eliminate their uninsured responsibilities.
The Chapter 7 bankruptcy generally takes from beginning to end, approximately 180 days. And then the court grants a discharge to the debtor. Typically, people with lower incomes or very fixed income qualify for Chapter 7 bankruptcy.
If filing for bankruptcy is an opportunity for a debtor to come out of a financial crisis and start over, Chapter 7 of the Bankruptcy Code is the way to achieve this goal more quickly. Under Chapter 7 of the Bankruptcy Code, the bankruptcy rule states that all non-exempt property of the debtor is sold and the proceeds thereof are distributed to the creditors. In most cases where Chapter 7 comes into effect, the debtor has no assets to lose, therefore, the new beginning takes place relatively quickly.
A trustee is appointed who collects all non-exempt property, sells the assets and distributes the proceeds of this sale to the appropriate creditors. Chapter 7 is different from other bankruptcy filings because the debtor does not need to make a payment to the fiduciary. Although in some cases this would mean that you will lose all your assets, this is not always the case. It is strongly recommended that, if you feel apprehensive and feel that you are going to lose your assets, discuss the matter with your bankruptcy attorney.