A Guide for the Chapter 7 Bankruptcy Process
To get rid of most of the debts and start over with the clean state then chapter 7 bankruptcy law will protect the debtors in this case. It is also called straight “bankruptcy” or “liquidation”. It also has drawbacks like depressed consumer credit score and loss of property. In this process, the assets of the debtors are sold and payment is received by the creditors to get free from the debts. One must be eligible to file for the bankruptcy and its rules may differ depending upon the type of filed case. After the changes in the bankruptcy law in 2005, now it’s harder to be eligible for chapter 7 relief.
Who is eligible to file the case?
The eligibility including “means test” must be met by the debtor to file the chapter 7 bankruptcy case. In case the debtor fails to fulfill the requirements of chapter 7 bankruptcy, the case is converted to the Chapter 13 bankruptcy by the bankruptcy court. All filers except the disabled veterans, who file eliminate the debt that incurred while on the active military duty or those filers with the debt that came primarily from operating the business, must meet the requirements of Chapter 7. The people with less income who are unable to pay back some portion of the debts. If the household income of debtors is below the state’s median level then they are eligible to file for chapter 7 bankruptcy.
Chapter 7 Bankruptcy Exemptions
As the chapter 7 bankruptcy sometimes involves the gathering of the assets or property of the filer, and then these are sold before the elimination of the rest of the debt and to pay off the debt as much as possible. However, this law also protects some of the property from being sold to pay off the debts. Such protections are called exemptions which include real estates such as the residence, certain personal property, automobile, and wildcard exemptions. To determine what is exempt from being sold, many states allow the debtor to choose and use the list that is set by the federal law. Be sure to check the law of your state to find out what is applicable in your state.
What properties are Non-exempt vs. Exempt under Chapter 7?
When filling for the bankruptcy, some property cannot be protected from the creditors. The property which is not exempted may include the expensive musical instruments (in case if the debtor is not the professional musician), the collection of coins, stamps, and other valuable items and the family heirlooms. Cash, stocks, bank accounts, bonds, and other investments like the second truck or car, or a vacation home that is probably not to be exempted.
Contact the Bankruptcy Lawyer
To get success in Bankruptcy it’s crucial to get the right help, whether the debtor file the case on its own, get the attorney, or use the preparer of the bankruptcy petition. Consider seeking the consultation. It’s better to consider the consultation of an experienced bankruptcy lawyer nearby this will help to decide whether to simply go for this process alone or get the assistance of legal representation.
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