A Chapter 7 bankruptcy, also known as a """"straight"""" bankruptcy or a """"liquidation"""" bankruptcy, occurs when the court decides to discharge a person's debts and punish him by liquidating or seizing his non-exempt assets.
Exempt assets are those that are legally protected and cannot be seized from the debtor. In Florida, for instance, a court cannot seize a debtor's home because the Florida Constitution safeguards the equity in the property.
In addition, the following properties are considered exempt: interests in IRS-approved retirement or pension plans (i.e. IRA's, 401K's, pensions, etc.), interests in insurance policies, accrued wages in a bank account, government benefits (veterans benefits, entitlements, social security, Medicaid, Medicare, SSI, etc.), $1000.00 in equity in any automobile, and $1000.00 in personal property. There are numerous other exemptions, and the list continues. (Practically, it is better to seek advice or explanation from the experts).
It is permissible to keep your secured obligations untouched and unaffected during the bankruptcy process. These secured debts include your residence, automobile, and other purchased personal property such as appliances, jewelry, etc.
If you decide not to keep some of your secured debts, you are permitted to surrender the properties and other debts associated with that decision. In any case, if these properties have deficiencies or have sustained injury, the additional fees are waived.
Additionally, you may retain one or two credit cards that are unaffected by the bankruptcy. This procedure is called ""affirmation"" because you are reaffirming the debt. Simply put, the act of reaffirming your debt provides your creditor the impression that you are liable for payment. Because you are holding on to it, you are holding your ground, and your bankruptcy will not protect you from it.
In the majority of instances, clients maintain at least one card with the lowest balance. It is a practical decision because a credit card is required when renting a car or purchasing airline tickets, and it is especially useful in an emergency.
Chapter 7 provides the majority of individuals with the ability to eliminate their unsecured credit card and medical bill debts, as well as safeguard all of their assets. A few individuals may suffer property loss, but it is uncommon. (Make some inquiries and clarifications regarding your particular circumstance).
A Chapter 7 method is straightforward and can be established in a matter of weeks. It can be completed more quickly and efficiently.""
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