The US Constitution gives Congress the power to make laws that pertain to filing bankruptcy. Congress has enacted the Bankruptcy Code to define what Chapter 7 Bankruptcy is and what are the rules that define it. Each year, across the country, hundreds of thousands of citizens use the Chapter 7 Bankruptcy Code to get their lives back.
So what is a Chapter 7 Bankruptcy anyway? Chapter 7 Bankruptcy is an orderly process of giving relief to debtors of their overwhelming debt and at the same time creating an orderly process to distribute the value of debtor’s non-exempt assets.
Imagine a world in which each creditor of debtors was on their own. Imagine what would happen? As soon as one creditor got a whiff of debtor’s overwhelming debt and possible use of bankruptcy, creditors would make an immediate run on debtor’s assets, leaving many creditors with very little and a few creditors with a lot.
The Chapter 7 Bankruptcy Code creates order out of this inherent conflict amongst creditors by allowing for an orderly distribution of debtor’s non-exempt assets (i.e. Assets debtors cannot protect). Now, with this said, the vast majority of Chapter 7 debtors have no non-exempt assets. In other words, the vast majority of debtors lose no assets in Chapter 7 Bankruptcy.
Instead, the debtor is allowed relief from their debts without losing any assets whatsoever. This is what we mean at Kain & Scott when we say, we “Help You Get Your Life back!” So, Chapter 7 Bankruptcy is a bankruptcy where you do not make payments back to your creditors. Instead, the focus is on your assets, and whether they are protected or not, and in the end your debt gets discharged, tax free!
When the time is right, or when you are ready, reach out to Minnesota’s OLDEST bankruptcy law firm at www.kainscott.com. You will be so happy you did!