In order to qualify for relief under Chapter 7 of the United States Bankruptcy Code, the debtor must be an individual, a partnership, or a corporation. Chapter 7 Bankruptcy relief is available irrespective of the amount of debts or whether the debtor is solvent or insolvent. An individual cannot, however, file a Chapter 7 petition or any other chapter, if during the preceding 180 days a prior bankruptcy petition was filed and dismissed due to the "debtor's willful failure to appear before the court or comply with orders of the court." Also, if an individual previously had a bankruptcy discharged within the last six years, he or she may not file another Chapter 7 petition.

The primary purpose of a Chapter 7 Bankruptcy is to obtain a discharge of certain debts. The discharge has the effect of extinguishing all of the debtor's personal liability to dischargeable debts. Although the filing of a Chapter 7 petition usually results in a discharge of debts, an individual's right to a discharge is not absolute. There are some types of debts that cannot be discharged and there are some instances where the Bankruptcy Trustee will object, forcing the debtor into a Chapter 13 or getting the case dismissed altogether. It is important to note that a bankruptcy discharge does not extinguish liens on property, which include vehicle and personal property liens, as well as mortgages.

Upon the filing of a Chapter 7 petition, an Interim Trustee is appointed to oversee and administer the "estate" and to liquidate any non-exempt assets for the estate. If, as is often the case, all of the debtor's assets are exempt or subject to valid liens, then the case will be deemed a no-asset case and there will be no distribution to unsecured creditors. If the case, however, is an asset case, then the trustee will "liquidate" the assets and distribute the proceeds among the unsecured creditors.

The "estate" is created upon the commencement of the bankruptcy filing. Technically, the estate becomes the temporary legal owner of all of the debtor's property, which means that he or she is not allowed to sell or dispose of any of their property after the filing of the petition and until discharge is granted. The estate consists of all legal and equitable interests of the debtor in property as of the commencement of the petition, including any property owned jointly or held by another party for the benefit of the debtor. The primary role of the Chapter 7 Trustee is to liquidate any of the debtor's non-exempt assets. In order to accomplish this, the Trustee will generally first inquire whether or not the debtor wishes to buy back the property, and secondly, just sell the property outright. The Trustee also pursues causes of action (lawsuits) belonging to the debtor. If money is owed to the debtor, the Trustee (on behalf of the estate) then collects this money according to the terms of any contracts or lawsuits filed on the debtor's behalf. The Trustee can also set aside preferential transfers that the debtor may have made prior to the filing of the bankruptcy and undo security interests where liens were not properly perfected.


Note: The information presented on this site is not intended to render any legal or other professional advice. If legal advice or other expert assistance is required, the services of a competent legal professional should be sought.

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For most American adults and even some teens, carrying debt is a simple fact of life. It seems, for any number of reasons, that our desire to consume often outstrips our ability to pay. Madison Avenue undoubtedly plays a role in appealing to our basest needs and wants; by creating ads that target our dissatisfaction with our bodies, our cars, our homes, and our jobs, ad execs convince us that spending is the answer to our perceived inadequacies. In the end, however, blame for our need to stockpile things falls not on marketing gurus, graphic designers, and copywriters, but on ourselves.

Step one in managing debt, regardless of its size, is realizing that each individual is responsible for his or her own problems. While there are rare exceptions such as serious illnesses and accidents, most financial burdens are brought on by mere recklessness. What begins with a one-time minimum payment on a credit card bill, just to name a common example, can turn into a recurring phenomenon. Or, the occasional "must have" shirt, shoes, or pants becomes a monthly fashion jones. Before long, the temptation of paying by "installments" grows irresistible to many consumers, despite its financially disastrous consequences. Thus, the best way to avoid this pitfall is to adopt a philosophy of total accountability - that is, resolve never to buy anything you can't pay for in the next 30 days.

One obvious question is this: why do youngsters today, both teens and twenty-somethings, have such a fundamental difficulty in taking control of their finances? It's no secret that the '80s marked the heyday of huge deficit spending, especially in government. No, Ronald Regan certainly isn't to blame for your monthly Visa balance, but the example set by the legislature (which drafts spending bills) as well as the Commander in Chief (who helps pass them) is one that appears to sanction deficits and forgive fiscal irresponsibility. The message thus comes across that if public officials can overspend, so too can private citizens. This belief is then internalized by heads of households and inevitably (by way of example) passed down to children, who have no grasp of the real consequences debt can create.

It's one thing to understand the problem and another to find ways of combating it. Today, the debt-management industry is a multibillion-dollar one; there are literally thousands of companies that claim to clear up credit problems for "bad luck" cases. This is a highly effective marketing tack since most good folks are likely to see their problems not as the direct outcome of poor decision-making, but of external factors beyond their control. The fact remains, however, that these companies wouldn't be in business if there was no money to be made in resolving other people's nightmares. There is -- and they do. That doesn't mean that all debt management solutions are scams, though. Those that consolidate debt or transfer high balances to lower APRs can be useful, provided you read the fine print. Before moving your debt from one place to the next, be sure that you're not simply receiving an "introductory" APR. More importantly, never forget that in the game of debt resolution, your own negotiating skills can be your finest asset. If you're already drowning in debt and have little else to lose, some creditors may grow jittery and start wheeling and dealing. They'd much rather have one percent of everything than 100 percent of nothing.

Visit the home page of The International Association Of Professional Debt Arbitrators
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A secured debt is a debt in which the creditor maintains a security interest in an item or piece of personal property such as a house or an automobile. With secured debts, if you fall behind on payments, the lender can repossess the property that originally secured the debt. An additional drawback to secured debt is the fact that you may remain liable for the deficiency balance owing on the debt after your property has been repossessed and sold.

However, the laws regarding home mortgages vary from state to state. This means that a lender's debt recovery rights will depend on the terms of your mortgage and whether any other lenders also have an interest in the property.

Unsecured debt is debt in which you borrow from a creditor to obtain goods or services on credit in exchange for your promise to repay the debt. The primary difference between secured and unsecured debt is that unsecured debt is not collateralized by personal property.

Unsecured debt is commonly given in the form of credit card debt, commercial debt, medical debt, and personal loans. If you fall behind on an unsecured debt, lenders can take legal action against you, but more commonly will try to work out a reasonable debt settlement. It is possible for a secured debt to become an unsecured debt when the property that is securing the loan has already been repossessed and sold by the creditor.

Traditionally, if the sale of the property does not cover the full amount of the debt, it will result in a deficiency balance which is still the responsibility of the consumer. This deficiency balance is now considered an unsecured debt because no property is securing it. In many cases, this balance can be successfully resolved through a debt settlement program.

Alan Barnes IAPDA Certified Debt Arbitrator and President and CEO of Debt Regret
http://www.debtregret.com

Article Source: http://EzineArticles.com/

Learn more about a career in Professional Debt Arbitration
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