Bankruptcy chapter 7 is also known as the liquidation chapter. It allows an appointed trustee to take the assets of the debtor, sell them and pay off the debts. The petition is either voluntary or involuntary. Voluntary means that it is out of the debtors willingness that a petition is filled. Involuntary means that that the court forces the debtor to file the petition which in most cases the creditor goes to court to seek justice against the debtor.
Under this bankruptcy code, the debtor is allowed to exclude some of the property that is exempt from bankruptcy. This is overseen by the court orders after the debtor has filed a petition with a list of the exempt property. This however is determined by the debtors choice of either the federal law or the state law. Nowadays, debtors have a choice between the federal law or the state law of which many opt for the state law to determine and protect the exempt property on their behalf.
Once a petition is filed, the trustee or bankruptcy administrator holds a meeting with the creditors and the debtors. This has to be done between the 20th and 40th day after filing the petition. It has to be done in a place with enough trustees or administrators. If the place chosen for meetings has inadequate trustees the meeting is held for 20 more days. This is an opportunity to put the debtor on oath and have them answer questions on their financial status.
The insolvency code allows the trustee on behalf of the debtor to file a “non asset” petition. This is if all the properties of the debtor are exempt and cannot therefore be liquidated to cover the debts.
Originally posted 2009-11-29 07:04:37. Republished by Old Post Promoter
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