The term bankruptcy is likely a familiar one, but did you know that there are many different types of bankruptcy? One of the more common types used for individuals is Chapter 7. The following provides more information on this type of bankruptcy:
- Defined. Chapter 7 bankruptcy involves the discharge of qualifying debt. Examples can include credit card debt and medical debt. Once discharged, the individual that is granted relief through a successful petition for bankruptcy is no longer liable for the discharged debt.
- Process. The process begins with an application or petition for relief. If granted, an automatic stay will go into effect. This is a court order that means creditors can no longer demand payment. A trustee will be assigned to the case to review the assets and liabilities and administer the case.
- Aftermath. It is important to take proactive steps after a bankruptcy is complete to begin rebuilding your credit. It is important to pay all bills on time. It can also help to get a credit card. Establishing that you can manage a credit card and make payments on the due date will help to build your credit score.
Putting together a petition for relief requires completion of an application as well as submission of various schedules and paperwork. A failure to properly complete this petition can result in a denial of relief. As such, it is wise to seek legal counsel. An attorney experienced in handling Chapter 7 bankruptcy cases can provide assistance throughout the application process and help better ensure you receive the relief you need.