Financial challenges are not an unusual issue in Tyler and throughout Texas. Many people might not be aware that there are numerous options they have to try and overcome their problems and get back on solid ground. One is Chapter 7 bankruptcy. Before pursuing this course of action, it's important to understand various aspects of Chapter 7, such as what it accomplishes and who is able to file for it.
Unlike other forms of bankruptcy, filing for Chapter 7 does not require that the individual who is filing issue a repayment plan. Instead, a bankruptcy trustee takes the non-exempt assets that the debtor holds and sells them. After they are sold, the trustee uses the proceeds from the sale to pay off the creditors as much as possible.
Some portions of property that the debtor owns could have liens and mortgages that will pledge the property to the creditors. However, under the bankruptcy laws, a debtors is able to retain certain properties. These are referred to as "exempt." The other assets will be liquidated by the trustee.
Basically, anyone can file for Chapter 7. It can be an individual, a partnership, a corporation or other type of business. Those who have filed for any form of bankruptcy in the previous 180 days cannot file for Chapter 7 if the filing was dismissed due to failure to adhere to the order, failure to appear in court or failure to comply with the orders the court issued. The debtor might have voluntarily dismissed the case to recover property that had liens against them. This too will disqualify a person from filing for Chapter 7.
Debtors cannot always discharge of all their debts under a Chapter 7 filing, and it will typically not terminate a lien against a property. Those who are thinking about filing for bankruptcy must be aware of every potential positive and negative in the process. If Chapter 7 is a viable choice, it is wise to discuss the matter with an attorney before moving forward.
Source: uscourts.gov, "Chapter 7 Bankruptcy Background; Eligibility," accessed on Sept. 28, 2015