What is Chapter 7 Bankruptcy Law

It can be pretty stressful when you're deep into debt and are looking for options. It doesn't help any that the terminology can be quite confusing for those unfamiliar with it. If you're considering bankruptcy, you may be confused by the various possibilities, including the difference between chapter seven and chapter 13 bankruptcy. What exactly is the chapter seven bankruptcy law?
First of all, you shouldn't worry too much about the specific terminology. The various types of bankruptcy available to consumers are simply named after the corresponding chapters of the bankruptcy code. Although there are a number of different types of bankruptcy, there are two major forms: chapter seven and chapter 13.
While chapter 13 tries to establish a payment plan for you, chapter seven bankruptcy tries to eliminate the debt without your having to repay any of it. This doesn't always work out exactly this way, since some debt obligations are not usually eliminated. These include Federal income taxes, alimony, and criminal fines.
However, most people look to bankruptcy when they are facing large amounts of unsecured debts such as medical bills or credit card debt. These kinds of financial obligations are usually done away with if you successfully file chapter seven bankruptcy.
What are the downsides? Well, besides the blow to your credit score and your ego, chapter seven bankruptcy may require you to liquidate some of your assets. Of course, most people who have reached this stage in their financial lives don't have any significant assets to speak of. Those who do own a house, for example, are often protected by their state's homestead exemption.
But isn't bankruptcy inaccessible to most Americans now because of the recent changes in the bankruptcy code? No, not really. A small percentage of people who would have qualified in previous years will now be ineligible because of the new statutes. The rest will still qualify, though they may have to go through additional hurdles such as tediously documenting their income and attending financial counseling classes.
As always, the specifics of your situation will determine whether bankruptcy is available to you, or whether you even need to consider it in the first place. Be sure to consult legal advice before making your final decision.