Chapter 7 Bankruptcy Laws: All You Need to Know


    The financial market during favourable times acts as a robust engine of growth. Stock markets around the world exhibiting bullish tendencies favour buyers and agents in the market who buy stock and sell the same when the value of the stock has appreciated considerably. However, markets are open to external shocks in this integrated world financial community and the volatility of the market structure has felled many a giant. Recessions, cut down on production, inventory accumulation are all indicators of the fact that the market is about to experience a slump. With high levels of inflation and unemployment, the market is many a times engulfed in the jaws of stagflation. Investors often go bankrupt due to these unforeseen shocks which influence the market heavily and the only option open to them during such times is to file the chapter 7 bankruptcy law.

    Bankruptcy: What it is all about?

    Bankruptcy is essentially a procedure under the federal law whereby individuals and businesses can deal with their debts and get protection from their creditors. The bankruptcy laws were formulated to provide debtors/businesses with a fresh start to their financial careers. Filing bankruptcy enables individuals to get protection from the federal law whereby they are insulated from creditors and still get to hold on to their assets.

    Chapter 7 bankruptcy laws

    According to chapter 7 bankruptcy laws, there are two phases to filing for a bankruptcy under the federal law. The first phase is the planning procedure when the individual or the business organisation keeps a record of their debts and their assets with which they can either choose to pay back the creditors or file for bankruptcy. The second phase of filing for bankruptcy comes with an automatic stay period from the government which abolishes creditors from harassing you with debts during that duration. Chapter 7 bankruptcy information states that the second phase of filing for bankruptcy by an individual or an enterprise involves the hiring of the services of a bankruptcy attorney who assesses your debts and assets and what portion of the same can be made liquid so as to pay back your creditors.

    The payment of debts is carried out in phases. Investors investing with your business organisation are classified under two broad types. The secured creditors are paid first because most of their investments are backed by collateral such as assets or shares of the company or other mortgages. The unsecured creditors are then considered and their status is upgraded to absolute priority in the books of the attorney handling the case.

    The cases filed under chapter 7

    According to US records of bankruptcies filed by business and non business cases ending March 31st, 2013, a total of 1,170,324 cases of bankruptcy was filed and 804,885 of these cases filed under chapter 7 bankruptcy laws. Of the total of 804,885 cases, 25,579 of them were business filings and a staggering 779,306 were filed by non business cases under the chapter 7 bankruptcy norms. If you are an individual or a business organisation and want to file for bankruptcy under chapter 7 of the bankruptcy rules, and if your case is genuine in nature then you can be released from the clasp of creditors within 90 days of filing for bankruptcy.

    Source by Doug B Raed