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27 June 2017

What To Know About Chapter 7 Oakland CA

By Arthur Walker

Becoming bankrupt is never something that someone plans as they live their life. Most people usually find themselves in this situation. To avoid bankruptcy, all you have to do is live within your means and spend less money than you earn. Making prompt loan payments will also help to improve your credit rating, which will reduce your cost of borrowing. If you find yourself in a financial mess, however, you should consider filing a chapter 7 Oakland CA.

There are three main forms of bankruptcy but individual consumers can only qualify for two of them. These are chapters 7 and 13. The former provides for liquidation of property to recover funds to pay creditors. The latter, however, provides for restructuring of debts owed by the debtor. Both have advantages and shortcomings, so it is important to think over the decision before making a final decision.

To qualify for this bankruptcy option, you must be an adult with personal debts that you have defaulted on. Your income must also be either low or unreliable. You must also have assets that can be sold to recover funds to pay off your debts.

The first thing the court will do is appoint a competent trustee to oversee the process. The trustee will start by accounting for all eligible assets and qualifying debts. The next step will be to set a date for the auction. After collecting the proceeds of the auction, the trustee will distribute the proceeds to creditors.

It is important to note that the funds recovered from liquidating assets does not have to be enough to settle the outstanding debts. The funds could be only a tenth or a quarter of your outstanding debts, but your debts will be forgiven once the funds have been distributed to all the creditors.

Debts are normally prioritized during a chapter 7 bankruptcy. For instance, court fees and taxes are usually given priority and must be settled in full. What remains from the proceeds of the liquidation process is usually distributed to creditors based on their fraction of the total debt you owe them. The trustee must make sure the law is adhered to.

All forms of bankruptcies have consequences that consumers should know about before deciding to file the necessary paperwork. The first is listing by creditors. Your credit report will show that you are bankrupt, so lenders will reject all your loan applications. Your credit cards will also be cancelled. Renting a car or house, or even getting a job, when you are bankrupt is not easy. This is because nobody wants to associate themselves with an individual who is deemed financially irresponsible. Before you seek bankruptcy protections, therefore, you should familiarize yourself with the consequences of bankruptcy.

When you want to enjoy the legal protections provided by the Federal Bankruptcy Act, you should take your time to hire a competent lawyer who will help you with the case. In addition to advising you throughout the process, the lawyer will also help you with the paperwork and represent you where necessary. When looking for a suitable lawyer to hire, experience and reputation are the most important factors to consider.

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