Chapter 7 bankruptcy is simply a set of statutes that provides for bankruptcy relief to debtors. In this type of bankruptcy, the debtor’s property is liquidated so as to pay off creditors and deal with any other debts. This often provides the debtor with a kind of “fresh start”. When liquidating the debtor’s property, there are certain things that are exempted from the liquidation process and these may include one’s trade tools, house and other personal items. The exemption of these items always depends on the state laws.

In some cases of the Chapter 7, one may lose his or her home depending on the state laws. Although you may lose your house, this does not mean that you are going to get out of your debts pit quickly. In October 17, 2005, there were changes made to the bankruptcy act which made the whole process much expensive and longer making it much more difficult for debtors to relieve debts through this law. Some key changes to these laws have been made which include the key tests that determine if a certain debtor will be able to make use of the chapter 13 instead of the Chapter 7, hence repaying his or her debts over a period of 5 years. Most cases of consumers and the filing of the chapter 7 bankruptcy end up in a case whereby all the consumer’s assets are exempted, and in this case there will be no assets to liquidate or rather no dividend to be paid to creditors. Chapter 7 is now known as the fastest form of bankruptcy available today. This type of bankruptcy is usually available to corporations, partnerships, married couples and individuals.

Before you go on to file the Chapter 7 bankruptcy you must first be granted that you are eligible for it. This all depends upon the case scenario that you are faced with and tests may need to be carried out. Your eligibility is based upon the bankruptcy laws of 2005. There is a means test that is performed to check if you are eligible for chapter 7. A comparison of your assets and income to that of the state standard is made.

Those people who earn far less than the standard state family income of their family size will be eligible. Those that earn more are only given the Chapter 13 option that allows them to have their debts paid over some years. Confirming ones eligibility may include mandatory credit counseling with budget analysis. These set the means of calculations for the debtor’s eligibility for filing. Although you may have the option of calculators on the internet, the bankruptcy lawyers may be the best help for you when it comes to sizing up your situation.

The process all begins with the debtor filing in an official petition, financial affairs statement and schedules. In these items you will highlight your financial history, all your debts and all the assets in your possession. This is a crucial part in the filing of the chapter 7 bankruptcy and is the one that consumes a large amount of the process time. You must make sure that you include in the schedules, all the creditors with their correct mailing addresses. All your debts must be listed in the schedules, whether they are non dischargeable or those that you are going to reaffirm. The schedules are thus signed by you the debtor in the penalty of perjury. Your district bankruptcy clerk is the one who files the schedules.

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Category: Legal
Keywords: bankruptcy, chapter 7, chapter 13, lawyer, attorney