What are the benefits of Chapter 7 Bankruptcy?

Filing for bankruptcy has provides protection and relief from creditors. Under Section 362 of the U.S. Bankruptcy Code, an individual who files for bankruptcy is afforded protection from creditors known as the Automatic Stay. When an individual or entity files for bankruptcy they are protected from direct contact from their creditors which is also provided to the debtors property. This means assets are protected from being collected upon, properties being seized or any type of legal proceeding. Creditors, in affect, are required to go through the bankruptcy court, file motions for relief from the Automatic Stay in order to get a court order to pursue specific assets or property.

Additionally, under bankruptcy exemptions individuals are able to protect personal property, equity in their homes and other personal assets. In California, individuals can use federal exemptions to protect equity in their homes or otherwise, they are afforded a state wild card exemption of roughly $23,000 for personal property. Should the debtor have assets beyond those exemptions those assets are sold and paid to creditors in order to be allowed a discharge.