When given a choice, most debtors would prefer to file for Chapter 7 bankruptcy as it completely discharges all, or almost all debt. To file Chapter 7, means that the petitioner must meet the standards of a means test to assess income and debt levels. An individual who has income in excess of that allowed to file for Chapter 7 may have his debt discharged if he turns a valuable non-exempt asset to the trustee, who in turn sells it and uses the proceeds to pay the unsecured creditors. When in doubt which way to turn it is always best if you consult with a bankruptcy lawyer in Salt Lake City.
The advantages of filing for Chapter 7 bankruptcy:
Fresh start: The idea of Chapter 7 bankruptcy is to give the debtor the opportunity of a fresh start. By eliminating specific debt, the debtor is free from the personal liability it entailed. There are certain debts that cannot be forgiven, such as student loans, child support and alimony. There are also certain taxes that must be paid, and any money gained from fraud must also be paid. If any of the debtor’s property is mortgaged or has a tax-lien or mechanic’s lien that will remain.
Keep future income: Any money or property that the debtor acquires after filing for Chapter 7 is not included in the assets. There are a few exceptions if certain property should come into the debtor’s possession within 180 days of the judgment. This would be property from an inheritance; divorce settlement, death benefits or the proceeds from a life insurance policy.
No limitation of the debt: The bankruptcy lawyer in Salt Lake City will tell you that certain limits are placed on the amount of debt that can be discharged when filing for Chapter 13 bankruptcy; this is not the case with Chapter 7. There is no limit to the amount of debt for Chapter 7 but under the rules of Chapter 13, if secured or unsecured debt exceeds the limit set, this is ineligible for discharge.
No repayment plan: Under Chapter 13 bankruptcy, the debtor must draw up a repayment plan which is approved by the court. In Chapter 7 bankruptcy, there is no need for a plan as there is no need for repayment of the debts.
Quick discharge: In most cases, when the debtor files for Chapter 7 bankruptcy and the application is approved; the case can be settled very quickly, usually in three to four months. After a 60 to 90-day period, the court will issue an order to discharge, the trustee then distributes the proceeds from the sale of the debtor’s property to the unsecured creditors and the individual can begin to build a new debt free life.
