A Chapter 7 Bankruptcy is advantageous to a consumer because it offers a “fresh start”. Throughout a consumer’s lifetime, bills are accrued by means of credit cards, medical visits, automobile purchases, etc. Through a Chapter 7 Bankruptcy, a debtor can ultimately be discharged from these obligations, which is known as the “fresh start”. Furthermore, there is some instant relief for the debtor the minute he hires an attorney. This is because he then can inform the creditors that he is represented by an attorney, which by law, wards off further direct creditor calls to the consumer.
Once a consumer is represented by an attorney, the creditors must cease all telephone collection attempts directed at the consumer and must consult only with the attorney handling the Bankruptcy. This gives the consumer immediate relief from the harassing phone calls that they’ve been receiving up to this point. Moreover, once the Chapter 7 petition is filed with the Court, there is an Automatic Stay put into place.
The Automatic Stay preserves the debtor’s assets by placing an imaginary bubble over the consumer’s assets protecting them from creditor collections. An Automatic Stay has the ability to ward off foreclosure proceedings, creditor collections, and other adversarial proceedings, which try to obtain assets from the debtor. The purpose of the Automatic Stay is to allow the Trustee of the Bankruptcy Court to put a valuation on all assets of the debtor to be distributed equally among creditors; however, the Trustee has little interest in small personal items of the debtor and really only looks to assets which could produce substantial liquidation value in an auction type setting. The Automatic Stay goes into affect the day the petition is filed with the Federal Bankruptcy Court. In conclusion, Chapter 7 offers the debtor a ‘fresh start” by discharging his debt, and providing informational credit counseling classes to ensure that the debtor regains his economic stability.
