Chapter 7 Bankruptcy Is Liquidating Bankruptcy
Chapter 7 Bankruptcy is commonly known as liquidating bankruptcy. Almost all of an individual’s debts are eliminated in Chapter 7 bankruptcy. However, if individuals have unprotected assets, they become property of the bankruptcy estate upon initiating a Chapter 7 case and can be collected and sold by the Bankruptcy Trustee to pay an individual’s creditors. Exempt assets explained in detail in a later chapter of this handbook, are protected in bankruptcy and may not be taken or sold by the Bankruptcy Trustee.
No One Comes To Your Home If You File Bankruptcy
In the vast majority of cases, no one ever comes to your home to inspect and take your assets if you file bankruptcy. This could happen however, if a Trustee has knowledge that an individual is attempting to conceal assets. If an individual’s assets are not exempt (protected) the Trustee would generally request assets be delivered to a location designated by the Trustee.
Your Personal Assets Are Protected In Bankruptcy
Individuals generally do not lose assets in Chapter 7 Bankruptcy. In the majority of consumer Chapter 7 bankruptcy cases, most assets owned by individuals are exempt from execution (i.e. protected) under applicable State and Federal laws. (See Utah Exemptions Act enumerating assets protected in bankruptcy and from creditors, summarized at the end of this Handbook section). Further, if individuals have significant non-exempt assets, they would usually file Chapter 11 or 13 to preserve their assets and avoid Chapter 7. Another common scenario is an individual’s assets have insufficient value to enable the Trustee to sell them and make a distribution to creditors. The Trustee would simply abandon all of an individual’s assets back to them.
Chapter 7 Discharge
In most cases, individuals file Chapter 7 and retain possession and ownership of their property. In Chapter 7, Debtors receive a discharge which eliminates almost all unsecured debt including credit card debt, medical bills, and other similar debt where collateral has not been pledged. The discharge also includes the remaining balances on debts secured by vehicles, real or personal property or other assets surrendered to Debtor’s secured creditors. The discharge typically does not include student loans, domestic support obligations, certain tax and other debts.
Reaffirm Secured Debt To Retain Secure Assets.
Individuals have the option of retaining possession of assets securing a Creditor’s claim such as a vehicle or other collateral, provided the individual agrees to continue paying the debt secured by the asset the individual desires to keep. An attorney will assist you in preparing a reaffirmation agreement to enable you to keep and continue to pay for a secured asset.
For more information on Chapter 7 Bankruptcy In Utah, a free initial consultation is your next best step. Get the information and legal answers you are seeking by calling (801) 988-5508 today.