Those who are looking into their debt repayment options are often confused by the term “straight bankruptcy” and wonder what it means. Straight bankruptcy is another term for Chapter 7 bankruptcy. This is one of the most popular and desirable bankruptcy options for individual debtors and those with families.
If you are facing debts that you are struggling to repay, it is wise to consider all of the possible options, including straight bankruptcy. By doing so, you will be able to apply the pros and cons of each option to your individual situation and find the best solution.
Straight bankruptcy involves liquidation
Straight bankruptcy rests on the assumption that you do not have the financial means to pay off your debts without help. This means that before filing, you will need to pass a means test in order to demonstrate that this type of bankruptcy is necessary for you.
After passing the means test and filling for Chapter 7 bankruptcy, you will surrender all of your nonexempt assets. These are then sold, and the funds raised from the liquidation process are used to pay off your debts.
What happens if the liquidation process does not cover all debts?
If the debts are still not covered after the liquidation process has been completed, it is likely that the rest of your debt will be discharged, meaning that you can complete the bankruptcy and enjoy a debt-free life.
Straight bankruptcy offers a great opportunity for debtors to change their situation. Make sure that you conduct thorough research before committing to any type of debt solution program so that you make the best decision for you.