Chapter 7 bankruptcy is sometimes defined as “absolute bankruptcy” or “liquidation”. This means, simply put, that some of your assets may have to be liquidated to satisfy some of your debts. But, in the end, the remaining debt will be discharged and you will no longer be legally responsible for these amounts. Until reforms to the US Bankruptcy Code in 2005, debtors had the option to choose which type of bankruptcy they wished to file: Chapter 13, in which some or all debt is paid back and most assets are kept or Chapter 7, in which some assets are liquidated and remaining debt is discharged. But, with the climbing rate of bankruptcies and huge losses to creditors and, eventually, the added costs to other consumers, the US Judiciary Committee initiated an investigation into bankruptcy abuse and overuse. As a result, sweeping changes to the Bankruptcy Code were signed into law in 2005 making it more difficult to declare bankruptcy and requiring a greater responsibility from the debtors for their indebtedness.
Now, those seeking to file bankruptcy must meet certain requirements and pass certain tests before they will be allowed to seek debt relief from bankruptcy by filing their case with Flint bankruptcy attorneys.
Here is a quick check list of requirements for filing Chapter 7:
– If your average current monthly income over the last six months is below of equal to the median income for your state, your are eligible to file for Chapter 7. Otherwise, you will have to file Chapter 13 or the “wage earner’s plan” where some or all of your debts must be repaid.
– If you are a disable veteran whose debts were incurred during active duty, you may file Chapter 7.
– If you have filed Chapter 7 in the last 8 years or Chapter 13 in the last 6 years, you cannot file Chapter 7. Flint bankruptcy attorneys can verify dates for you.
– You cannot file Chapter 7 if, in the last 180 days, either a Chapter 7 or Chapter 13 filing was dismissed because you :
- Requested a dismissal
- Committed fraud in your filing
- Violated a court order
– Before filing, mandatory credit counseling must be completed with an approved agency. Flint bankruptcy attorneys have a list of approved credit counseling agencies.
– A Chapter 7 filing will cost $274 and take about 4 to 6 months until debts are discharged. Attorney fees will be additional.
– A bankruptcy trustee is assigned to each case. This trustee has control over all assets and debts
– The trustee’s staff will determine if any assets should be nonexempt. Those assets must be surrendered or sold, the proceeds going to creditors.
– A creditor’s meeting, scheduled by the trustee, gives creditors a change to question the debtor as to the condition of collateral for secured debts
– Once all conditions of the bankruptcy are met, the debtor must attend mandatory budget planning with a government approved agency.
– When all counseling is complete, all remaining debts are discharged. At this point, the debtor is no loner legally responsible for those debts.
– A Chapter 7 bankruptcy will stay on credit reports for 7 years, affecting credit, interest rates, insurability, and sometimes employment.
When faced with the possibility of bankruptcy, Flint bankruptcy attorneys can help get your financial situation back under control.
