It is an official contract made between creditors and debtors; the agreement is legally binding. It lets a debtor become debt free with convenience and saves him from the stigma of insolvency; it allows the creditor recover as much debt as possible from a debtor who is on the threshold of bankruptcy.
Chapter 7 option under the bankruptcy code involves restructuring of debts that allows a debtor to repay his debts with whatever income source he has. It is applicable for people who have a proper income and are in a position to apply for adjustments. After filing chapter 7 bankruptcy, a debtor is required to decide on a repayment plan within 15 days. He needs to attend all the important creditor meetings that follow after that. As and when the court approves your repayment option, the bankruptcy process will start. Eric Ollason, Attorney at Law has all the necessary info on chapter 7 bankruptcy filing among others
Let us look at the main advantages of a chapter 7 bankruptcy. Court protection – Once a debtor has lodged a chapter 7 bankruptcy, he will be granted protection by the court from the debt collection agencies and the creditors. That means it is illegal to contact a debtor after he has been granted the chapter 7 petition.
Free from debts – This bankruptcy option clears most form of unsecured debt. However, secured debts cannot be shaken off unless there is a repossession deficiency.
After the arrangement is made, you have to pay a certain amount of money to your Insolvency Practitioner.
The practitioner will deduct his monthly fee from the amount thus handed over and then break up the remaining amount to pay off your creditors. If the payment is done like this on a regular basis, you will become debt-free in a period of five years.