As Wisconsin residents may be aware, Chapter 7 bankruptcy proceedings are one of the most common consumer bankruptcy proceedings. With a Chapter 7 bankruptcy filing, the debtor must liquidate the assets in order to repay specific debts to creditors. The debtors, however, are not totally defenseless in a Chapter 7 bankruptcy case. The person does have some protection in that situation.
In most cases, the personal assets of the debtors are exempt from the bankruptcy proceeding. In some cases, with the help of a bankruptcy attorney, the debtor might also be able to stop the person’s assets from being liquidated.
In fact, one of the biggest advantages that a debtor has in a Chapter 7 bankruptcy proceeding is the automatic stay. The automatic stay, by definition, begins when the bankruptcy petition is initiated in court.
An automatic stay grants immunity to the debtor’s assets against any other legal proceedings that are filed against the debtor. It is very important to most debtors who must declare bankruptcy since, in the majority of cases, the debtor has incurred a large amount of financial debt, which has led to the debtor’s bankruptcy and financial problems.
In some cases, however, the debtor and the debtor’s attorney might be able to prove that the debtor has no assets to cover the person’s debts. In some unusual cases, the automatic stay on the debtor’s assets can be terminated when the debts are resolved.
Additionally, the stay can also be terminated if one of the parties involved in the bankruptcy proceeding goes to court to terminate the stay. The creditors can also discount the assets willingly. In that case, the debtor will be able to get a fresh financial start in life.
Source: WISBAR.org, “Representing Chapter 7 Bankruptcy Debtors: Going for Broke,” accessed on June 23, 2015