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 meant to reimburse creditors as much as possible while clearing what the debtors in question owe. To that end, Chapter 7 entails liquidation of everything but non-exempt property that a debtor may own. What constitutes exemptions to liquidation is determined by either a federal set of standards and a state-determined set of standards. After the non-exempt property is liquidated, the remaining debts are dismissed.
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.
However, there are checks to make sure that people aren\’t simply abusing the system to get out of paying their debts. The courts have what is called a means test to determine whether or not someone is filing a so-called abusive petition.
A means test will examine a debtor\’s income and their expenses to determine whether the claim is abusive. The debtor\’s average monthly income for the past five years is compared to the median amount for the state that they live in. If it is above that amount, the bankruptcy claim will be subject to the second test, which investigates the expenses of that debtor in comparison to the amount of unsecured debt that they own. So if those expenses exceed 25 percent of the debt not secured by collateral usually something like credit card debt then the court will either turn the case into a Chapter 13 filing or simply dismiss the whole thing.
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.
Since the exemptions to what is liquidated under Chapter 7 don\’t include very much at all, those debtors wishing to keep the majority of the property that either has a lien on it or is the cause of debt would probably seek an alternative route to repayment. Likewise, Chapter 7 probably isn\’t right for those who wish to keep their business going. Another alternative, of course, is coming up with a repayment plan outside of court and avoiding the fees of filing for bankruptcy.
Armed with Chapter 7 Bankruptcy information, it\’s clear that your finances are going to be subject to intense scrutiny by the bankruptcy process. This is so that Chapter 7 can do exactly what it is meant to do: provide a means by which honest debtors can get their lives back on track.
Watch the videos to learn Bankruptcy Law and Debt Relief information before Filing For Bankruptcy. Anyone in serious financial difficulty should definitely consider consulting a lawyer that specializes in bankruptcy law.
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