The most used provision of the bankruptcy law is Chapter 7. Chapter 7 bankruptcy allows debtors to wipe out virtually all of their debt. The debtor files a petition for bankruptcy and in a court-supervised procedure a trustee takes over the assets of the debtor's estate and reduces the value to cash. The trustee then makes distributions to the creditors. That means that when you file for Chapter 7 bankruptcy, your assets may be at risk and some debts might not be discharged. Additionally, it is important to note that if you are married, it is required that you supply the financial information for your spouse, whether you are filing joint petitions, separate individual petitions, or if only one spouse if filing.
This allows the court to assess your entire household finances. Filing for Chapter 7 automatically stops most collection activities against the debtor for a certain period of time. You do have to attend a meeting of your creditors which is the opportunity for your creditors to raise any objections they may have. The entire process takes approximately ninety days to complete and barring no objections in the case, the bankruptcy will be discharged meaning there is no longer a legal obligation to repay the debt.
There are some debts that will not be discharged in bankruptcy. If you are hoping to discharge child support obligations, spousal support, criminal restitution and fines, or student loans in bankruptcy, you may want to look to other options because generally, these types of debts are not discharged.
