A person can become a bankrupt at any point of time due to any inevitable circumstance. If the person is a resident of America, he/she can get the opportunity to repay all his/her debts by filing Chapter 7 bankruptcy. Chapter 7 is a US Bankruptcy Code enacted for bankrupts to repay all their debts to creditors without losing any movable or immovable assets. Unlike Chapters 11 and 13, a debtor under chapter 7 can get the benefit of paying all his/her debts at a time.
Suppose, an organization faces shortage of funds and is not in a position to pay off debts along with monthly remuneration of employees. In such a situation, the organization needs to stop operation or to file for bankruptcy in the court in order to retain its original financial status. The organization can get the benefits of bankruptcy if it would file the case under Chapter 7. The filing for bankruptcy under Chapter 7 means there is a cessation in its operation until a trustee of the Chapter 7 confirms the clearance. The trustee is like a guarantor who assures the court that both movable and immovable assets of the organization that filed for bankruptcy would be auctioned.
In case of an individual intending to file for chapter 7 bankruptcy, the person is eligible only if he/she has experienced of his/her inability to repay the loan in the fixed tenure. The person in association with a bankruptcy attorney can file for bankruptcy under Chapter 7 by surrendering all his/her movable and immovable assets before the court. The court appoints a trustee who can auction his/her assets so that the amount received from auctioning would give to the creditor. All in all, Chapter 7 bankruptcy is a medium through which the bankrupts can get the privilege to repay all their debts at a time without holding the fear of asset repossession.
It is interesting to note that an individual or agency gets deduction in real estate mortgages and security interests for car loans while filing for Chapter 7 bankruptcy in the…