Understanding Chapter 7 Bankruptcy
- Once you have filed for the chapter 7, the US bankruptcy court will issue an ‘automatic stay’ order. This is to stop a majority of your creditors from further pursuing their collection actions against you. In other words, it legally prohibits the creditors to forcefully dig out their dues from your funds or assets. This helps you buy time for reorganizing your finances and managing your debt more effectively.
- Technically, when you file for chapter 7, you are providing the bankruptcy court with complete control over your property as well as debts. This implies that you cannot give away or sell your assets once you have filed for the chapter 7. The control of your assets and debts is exercised by a court-appointed ‘Bankruptcy trustee’. He/she will primarily be involved with paying off a major chunk of your unpaid debt to your creditors.
- Within a week or two after you have filed the petition, you will be called into the courthouse for a ‘creditors meeting’. This is chaired by the bankruptcy trustee. You will be asked questions regarding the filing of your bankruptcy. You will be asked about documents that you might have submitted for the purpose. The trustee will also determine the total amount of debt that you owe to your creditors.
Given the fact that chapter 7 is pretty cost-efficient in terms of filing and administrative costs, it is one of the most effective alternatives that you can opt for in case of a Sacramento bankruptcy.