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.
There are only two initial requirements to file a Chapter 7 claim. The first is that the debtor, whether it is an individual or a business entity, meet with a credit counselor up to 180 days before the claim is filed. The debtors record must also be clear of malfeasance with the bankruptcy court system for 180 days or more, otherwise they may be disqualified. Not taken into consideration are the amounts owed by the debtor(s), nor their financial solvency. In other words, Chapter 7 does not require that someone be destitute to qualify for a clean debt slate.
Of course, the court system isn't about to let someone clear their debts if they are clearly capable of paying them but refusing to do so. Thus, the federal government developed a 'means test' to figure out whether or not someone is trying to abuse the system with his or her petition.
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.
Filing a Chapter 13 bankruptcy has very different consequences. Under Chapter 13, the government helps set up a payment plan through which the debtor pays his creditor over the course of five years the maximum he or she is capable of, while still allowing for federally determined living expenses like rent, food, etc. The amount that cannot be paid after that period is erased.
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.
Chapter 7 is currently designed to resist abuses and dishonesty, so debtors should make sure that they're providing all the necessary personal information and are honestly qualified for that kind of debt relief. Chapter 7 bankruptcy information can help determine whether or not to pursue that solution to a financial crisis. - 31380
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.
There are only two initial requirements to file a Chapter 7 claim. The first is that the debtor, whether it is an individual or a business entity, meet with a credit counselor up to 180 days before the claim is filed. The debtors record must also be clear of malfeasance with the bankruptcy court system for 180 days or more, otherwise they may be disqualified. Not taken into consideration are the amounts owed by the debtor(s), nor their financial solvency. In other words, Chapter 7 does not require that someone be destitute to qualify for a clean debt slate.
Of course, the court system isn't about to let someone clear their debts if they are clearly capable of paying them but refusing to do so. Thus, the federal government developed a 'means test' to figure out whether or not someone is trying to abuse the system with his or her petition.
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.
Filing a Chapter 13 bankruptcy has very different consequences. Under Chapter 13, the government helps set up a payment plan through which the debtor pays his creditor over the course of five years the maximum he or she is capable of, while still allowing for federally determined living expenses like rent, food, etc. The amount that cannot be paid after that period is erased.
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.
Chapter 7 is currently designed to resist abuses and dishonesty, so debtors should make sure that they're providing all the necessary personal information and are honestly qualified for that kind of debt relief. Chapter 7 bankruptcy information can help determine whether or not to pursue that solution to a financial crisis. - 31380
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Get more information on Consumer Debt Relief. Anyone in serious financial difficulty 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?
