When a consumer or a business owner borrows money form a creditor such as a credit company or a bank, he or she may one day find out that she has overspent the money or his business had went bust. The failure of business and also the inability to control one’s own self from overspending is the starting point that leads to filing a bankruptcy, which is a process that is meant to help those in credit trouble to repay all their overdue debts so that they can be cleared of all debts.

Among the many types of bankruptcy available there is the chapter 7 “liquidations” bankruptcy which is, if you have opted for this then the consumer is either being spending too much or unwisely and ended up with a large sum of debts, or a business went bust over a period of time. Filing the chapter 7 will cause the properties of the consumers being taken away and auctioned or sold off to pay the debts, and in return the bankrupt will be cleared of all previous debts.

There is a catch though, not everyone can file for the chapter 7 “liquidation” bankruptcy. If one’s income is enough to repay the total debts monthly over a period of time, it is wiser for the consumer to file for a chapter 13 “repayment plan” instead. However, not all properties can be taken away to be auctioned or sold off, there are also exempted properties such as clothing, car, furnishings which are stated in a list of exemptible items which many whom filed for the chapter 7 will be relieved to find that most of their properties are exempted from liquidation – including properties like their residing house or car so at least they have a shelter for the family.

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