Chapter 7 Bankruptcy Discharge

Every nation has a different set of bankruptcy laws that governs the entire process of bankruptcy. Bankruptcy is a situation where a person files for insolvency with the court with a declaration of being 'bankrupt'. The situation of being bankrupt is generally, a position where a debtor finds himself in a position where he is unable to pay off his debts. There are two basic methods with the help of which people are able to file for bankruptcy, namely, voluntary or involuntary. The voluntary filing is where the person approaches the court on his own and files for bankruptcy. Involuntary filing is a situation where the creditors request the proceedings of bankruptcy to the insolvent person.

Origin of the Term
In the United States of America, the doctrine of bankruptcy proceedings is authenticated by Title 11, of the United States code, which is also known as bankruptcy code. This code is divided into 15 different chapters that contain provisions of the bankruptcy laws. The Chapter 7, is a collection of bankruptcy laws that aim at securing the regulations of 'straight bankruptcy', which we now refer to as the Chapter 7 bankruptcy.

What does Chapter 7 Bankruptcy Discharge Mean

The chapter 7 discharge proceedings are fairly simple and straight forward. The proceedings begin with the filing of the discharge. This filing can be voluntary or involuntary as stated above. After the bankruptcy application is received, the court appoints a liquidator, who is officially termed, US trustee of assets. The liquidator sells off all non-exempt assets of the filer and retains the assets that are absolute important for the survival of the insolvent person. The liquidation process commences after the official preparation of Schedule and Statement of Financial Affairs, which is duly signed by all concerned parties. This signing is followed by a first meeting of creditors where all trustees and creditors can question the debtor under oath. This has often been termed as 341. Within 60 days of the 341 meeting, the debtor's right to discharge under chapter 7 can be challenged by the creditors or even by the trustee. In case of no such objection, the proceedings may continue.

In accordance with the Bankruptcy Abuse Prevention and Consumer Protection Act, 2005, the debtor needs to attend to a consumer credit counseling as a part of the filing procedure. After this period of 60 days is over, the trustee begins the liquidation of assets. After about 4 to 6 months, the liquidation of all dischargeable debts are discharged by the liquidator and the debtor gets a fresh start.

Discharge of Debts: After-effects
After the discharge has been obtained from the court of law, all dischargeable debt are held to be non-existent and creditors cancel all their legal documents against the debtor. One extreme concern of all bankruptcy petition filers is that will the family of debtor be affected? The straight forward answer will be yes, but the circumstances will affect it indirectly. In such a scenario, the credit reports and public records of all family members will be safeguarded. The public at large, such as your neighbors or relatives, will not even know about your bankruptcy. But these record will stay with all your public documents and credit reporting agencies and your employer or future employers will know about the discharge. This blemish will disappear after 10 years.

A discharge is often brutal in proceedings and can be a very traumatic experience. Bankruptcy alternatives and bankruptcy assistance should be strongly considered in such a proceeding. This discharge is meant to provide any debtor with a fresh start.