Chapter 7 Bankruptcy Information: Your New Slate
It\’s usually unclear to people exactly what options are open to them when they are considering Chapter 7 bankruptcy, which is why a little Chapter 7 bankruptcy information can go a long way. The economy has been very tough on a lot of Americans lately, and the recent changes to bankruptcy laws in 2005 has left many wondering exactly what Chapter 7 means. Chapter 7 is, if a filing is successful, the best way to get clear your debt. Please keep in mind though, that any decisions about the matter should be made in consultation with a bankruptcy lawyer.
Chapter 7 Bankruptcy is the complete liquidation of all property not subject to a list of State-determined or federally determined exemptions. This property is sold to reimburse, in part at least, the creditors that the debtor owes money to. There is no repayment plan under Chapter 7; the debts are simply discharged. Applying for this type of bankruptcy is the equivalent of a fresh start, debt-wise.
As for eligibility, any individual or business entity (including partnerships, corporations, and others) can apply for Chapter 7. Anyone filing for Chapter 7 must have applied for credit counseling at an approved agency (check with a lawyer or the agency itself) up to 180 days before filing. Also, if the debtor has failed to appear at their scheduled bankruptcy hearing or otherwise irked the court 180 days before filing for Chapter 7, they are disqualified. The amount owed to creditors isn\’t taken into consideration by the courts, nor does the ability of the individual or business to pay debts at all factor inherently limit filing for this type of bankruptcy.
The government does have ways of determining whether or not people are filing what is called an abusive Chapter 7 claim and actually has the means of paying their debts, but refuses to. This system is called a means test.
The first part of the means test checks to see whether a debtor\’s monthly income is above the median for their state of residence. The second part involves a concept called unsecured debt, which means the type of debt that isn\’t secured by the creditor with debtors\’ assets. Mostly, this applies to credit card debt. If your expenses exceeds 25% of their unsecured debt, then the court presumes that the case is abusive and will probably dismiss it or convert it to a Chapter 13 bankruptcy filing.
Chapter 13 bankruptcy is just one of several alternatives to filing for Chapter 17 bankruptcy. To describe it briefly, Chapter 13 forces the debtor to repay his creditors over the course of five years. Whatever cannot be paid back is dismissed.
Very little is exempted during the Chapter 7 process, so debtors who want to keep their house and motor vehicle, amongst other things, should probably not file for Chapter 7. Also, if the debtor owns a business and wishes to keep it going, they should probably seek alternative means of declaring bankruptcy. One alternative is settling with debtors outside of the court system and finding a payment plan through negotiation.
Whatever a debtor ultimately decides to do, with the Chapter 7 bankruptcy information that is evident, their finances are going to be critiqued heavily. The court system, including Chapter 7 filings, is only meant to benefit trustworthy debtors who want a fresh start.
Find out How To File For Bankruptcy.Anyone in serious financial trouble must definitely consider seeing a lawyer that specializes in bankruptcy law. Find out more details about Chapter 7 Bankruptcy Information and who can apply for it?
