CHAPTER 7 BANKRUPTCY by saratremellaw1

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Chapter 7 of the title11 of the U.S code deals with the process of liquidation incase of bankruptcy under the U.S law. This is the most common form of bankruptcy in the United States and thousands of Americans file for bankruptcy every month. It provides a fresh start to those who can no longer afford to carry their debts; it provides a chance to rebuild their credit.

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									                             CHAPTER 7 BANKRUPTCY

Chapter 7 of the title11 of the U.S code deals with the process of liquidation incase of
bankruptcy under the U.S law. This is the most common form of bankruptcy in the
United States and thousands of Americans file for bankruptcy every month. It
provides a fresh start to those who can no longer afford to carry their debts; it
provides a chance to rebuild their credit. The businesses in debt and unable to
service that debt or pay its creditors may file for bankruptcy under this law which
means that the business ceases operations until a trustee is appointed. The trustee
examines the financial affairs and sells the assets and distributes the proceeds to the
creditors. Once all the debts have been administered the case is closed. Individuals
may file for bankruptcy in a federal court; however, those people who have had
bankruptcy cases dismissed within the previous 180 days are not eligible. Many
types of unsecured debt are discharged under this law but common exemptions
include child support, income taxes less than 3 years old, property taxes, student
loans, fines and restitution imposed for crimes.

Methods of filing bankruptcy:

      federal bankruptcy forms
      bankruptcy software
      non-attorney petition
      bankruptcy attorney

The Means Test:
Before filing for bankruptcy one has to qualify the means test in order to be eligible.
It’s a two-step process which begins with median income comparison and the next
step is calculating disposable income for the next 5 years. If your income is at or
below the median income and your disposable income is less than $6000 then you
qualify for the chapter 7 bankruptcy protection.

Credit Counseling:
The law also requires that the credit counseling briefing be done from a certified
agency before filing the chapter 7. The agency will explain financial management,
budgeting and also give you alternatives to filing bankruptcy. There are exceptions to
this rule but most debtors are required to get this briefing before filing bankruptcy
and a failure to do so may result in the case being dismissed.

Bankruptcy lawyer:
The next step is to provide all the information to your bankruptcy attorney who
reviews your case and prepares a petition which he files in your local bankruptcy
court. All your personal information including all the assets, expenses, debts and any
exemptions which you are entitled to have to be listed on the petition and related
forms. All information has to be disclosed as bankruptcy fraud is a serious offence
and liable for prosecution. A bankruptcy lawyer helps to prevent bankruptcy fraud.
Once the petition is filed a trustee is appointed and an ‘automatic stay’ is entered to
prevent creditors from taking further action. Exemptions protect certain property,
which typically include the primary residence, tools, work equipment, vehicle, certain
items of personal property and numerous other categories of property from
liquidation in bankruptcy. The specifics vary from state to state.

Secured debts:
The secured debts cannot be discharges as they are attached to the asset that
secures them i.e., if a car loan is to be discharged you need to give back the car.
However, if you want to retain the asset then a reaffirmation agreement is
negotiated with the creditors under chapter 7 bankruptcy. You have to continue
making the payments in order to retain your asset.
The last step is getting your bankruptcy discharge and completing an approved
Debtor Education Course: a personal financial management course required by the
Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, referred by your
bankruptcy attorney. Filing bankruptcy is a decision which shouldn’t be taken lightly,
however, if you’re in a difficult financial situation and unable to cope then this may
be the opportunity to seek protection from creditors and regain control of your life
and rebuild your credit.

								
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