The primary characteristics of a Chapter 7 bankruptcy are permanent discharge of unsecured debts, which means that as long as there are no properties attached to the debts, all debts will be wiped out. Automatic stay orders a protection from the court that will stop all creditors from contacting you. They are prohibited from all harassing threats, lawsuits, phone calls, judgments, repossessions, and garnishments. Keep exempt property is when people keep their property in a bankruptcy. For instance if you have household goods or furniture of average value, it is likely that you get to keep your personal property. Keep your house and car is when you are able to still make payments on your mortgage or car loan and you can keep your house or car in a Chapter 7 bankruptcy. In order to do so, you would have to sign a reaffirmation agreement. It is not recommended to file for a reaffirmation agreement, you should still continue to make your monthly payments. The reaffirmation agreement replaces your original agreement and makes it as though you didn’t file for bankruptcy on your mortgage or car loan. Property you cannot keep is usually non-exempt and can be used to pay creditors a portion of the claim. Non-exempt property is cash and bonds, equity in second home, investments, valuable collections such as stamps, paintings, coins, etc.
2. What is the purpose of a Chapter 11 bankruptcy?
The purpose of a Chapter 11 bankruptcy is to forbid creditors to collect debts on pre-bankruptcy. This also gives the company a chance to reorganize their current operations and finances through the federal bankruptcy law. It will allow them to propose a settlement to pre-bankruptcy creditors through a plan of reorganization. If the bankruptcy judge accepts the plan, then the plan will be confirmed and the company will be allowed to exit chapter 11 protections once the federal court is ordered.