Chapter 7 bankruptcy

Chapter 7 bankruptcy is a section used for filing the bankruptcy petition. It also means the liquidation of any business process. It is basically the process to facilitate the debtors to get new and good start in financial dealings. Or in other words it means the process of terminating the business operation by using or selling the entire asset in order to discharge the total liability. According to bankruptcy code, the debtor’s nonexempt property is sold out by the trustee and the trustee distributes all the profit and earning to the creditors.

It is the most widespread method of filling the bankruptcy. With the help of this code, the debtors can once again start their new business operation. Chapter 7 bankruptcy clause says that, there is no need for a debtor to make any reimbursement to the appointed trustee. According to Chapter 7 bankruptcy, all the debts are cancelled and in response to this the bankruptcy court pays the debts to the creditors by selling the property of the debtors.

For filing the bankruptcy petition some important formalities and legal documents must be filled by the person and submit it to the bankruptcy court. Once the court gets the petition for filing bankruptcy, then it immediately sends the letter or official notice to all the creditors. The notice send by the court to the creditors is an official order for stopping the creditors for taking the next step against debtors. After this, only the bankruptcy court will sort out this matter and court is responsible for distributing the arrears to the creditors.

When the debtor files the petition with the court, then it is the duty of the debtor to reveal about all its assets and property and also disclose to whom they have to pay the debts. The trustee appointed by the court is the mediator, who converts all the nonexempt belongings and assets into cash in order to give out to the creditors. After all these proceedings, the court releases the debtor on all dischargeable amounts outstanding.

People, who became bankrupt, can file the Chapter 7 bankruptcy petition within the bankruptcy court and release from all dischargeable debts. Debtors and well creditors can sort out their financial matter and issues under chapter 7 bankruptcy act. It gives a new start to the debtors because the court converts the property of the debtor into cash for paying creditors.