Chapter 7 bankruptcy is the commonest denotation of bankruptcy. It stands for waiving or canceling of debts that you have incurred. As an individual, you can select between Chapter 13 or Chapter 7 bankruptcy. Selecting between the two is not easy. The bankruptcy court will study your circumstances before deciding which type of bankruptcy is applicable to you.
The Chapter 7 bankruptcy is applicable if you have no regular sources of income. It works by reducing or clearing off all your debts. You can then make a fresh start without having to worry about having to pay your debts.
Once you file for Chapter 7 bankruptcy, the bankruptcy court assigns a trustee who works as an intermediary between you and the debtors. He oversees everything and checks out if the bankruptcy plan is going as planned.
But you also have to hand over your possessions and properties to the trustee. They are sold off and the money is used in clearing your debts. But what you can do is to keep a part of your home, cars or some of your property. But most of your debts are cleared off.
But filing for bankruptcy is not an advisable option of freeing yourself from the shackles of debt. They actual show you in poor light and will remain as a blot on your credit report for next 10 years. They lower your credit rating drastically. This may make you ineligible for any future credit and loans.
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