If you are facing serious financial challenges, then you're likely open to all debt relief options. One of the most effective ways to wipe out debt is to file for Chapter 7 bankruptcy. However, before doing so you should do your best to fully understand the process, its benefits and its disadvantages. This week we hope to give you a little clearer sense of part of the process and one of its biggest advantages.
Let's start with one important part of the process: the meeting of creditors. About a month after a Chapter 7 bankruptcy petition is filed, the trustee in the case will bring all of the petitioner's creditors together. The purpose of this meeting is two-fold. First, it seeks to give creditors a clearer sense of the petitioner's financial situation. Second, it serves as an opportunity for the petitioner to be put on the record affirming that he or she knows what the bankruptcy entails. For these reasons, it is important that petitioner's attend these meetings. If they don't, then they may not be successful in seeking bankruptcy.
As daunting as the meeting of creditors may seem, Chapter 7 bankruptcy offers one very important advantage: the automatic stay. This means that once a petition is filed many debt collection practices must be "stayed," which means they must be stopped. This can prevent foreclosure and repossession, thereby giving an individual an opportunity to develop a strong financial plan moving forward.
Chapter 7 can provide significant debt relief because, if successful on a petition, unsecure debt can be eliminated after liquidation of certain assets. However, Chapter 7 is not right for everyone, especially because liquidation of assets is such a big part of it. To learn more about your bankruptcy options and better determine which one is right for you, consider sitting down with an experienced legal professional you can trust.