We have all heard of chapter 7 bankruptcy, although many of us if asked probably could not give a precise answer to what exactly it entails. Sadly many folks make dreadful errors in their bankruptcy filing because of this lack of explanation. Certainly no one wants to become involved in bankruptcy proceedings. However if their debts add up to more than what they have coming in sometimes this is sadly inescapable and doing some self learning into the world of how to bankruptcy filing comes highly recommended despite how ugly it seems.

There are a number of different forms of bankruptcy such as chapter 11 bankruptcy and the more common chapter 7 bankruptcy. Since chapter 7 bankruptcy is more common for individuals, it is the one we will focus on here.

Defining chapter 7 bankruptcy for all

According to the law and the United States court system, Chapter 7 bankruptcy refers to liquidation of assets that are not legally exempt from liquidation in order to pay off creditors and debtors.

Chapter 7 is an option open to individuals, businesses, partnerships and corporations. Chapter 7 bankruptcy is however different for individuals in that they have open to them a special extra clause in the bankruptcy filing framework.

This extra clause for the individual is commonly known as a discharge. In essence what this discharge entails is the opportunity of freeing the individual from a host of certain debts.

The first things to do when filing chapter 7 bankruptcy: If you need to get involved in chapter seven bankruptcy some of the things you will need are the following: copies of tax returns; executed contracts and leases that have been expired; financial affairs statements; proof of assets and liabilities; and copies/schedules of current expenditures and income.

For individuals other additional documentation has to be supplied to the courts. These items include: copies of credit counseling reports and repayment plan programs, employer payments and statements of income, interest payments on student loans, etc.This is, of course, a brief overview and more detailed information is provided by the government and federal courts at the website uscourts [dot] gov. However, remember filing for Chapter 7 protection by yourself is not advised, you should get professional help from a lawyer.

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