Chapter 7

Chapter 7 bankruptcy is a quick, affordable, and incredibly powerful debt-relief tool.  The main purpose of filing Chapter 7 bankruptcy (also called “straight bankruptcy” or “liquidation bankruptcy”) is to discharge unsecured debts, such as that from credit cards, personal loans, payday loans, deficiency judgments on foreclosures or repossessions, and medical expenses.  There is no debt limit in a Chapter 7 bankruptcy.  A Chapter 7 bankruptcy can also help you get of rid “upside-down” homes and vehilces and other non-performing assets.

Usually most, if not all, of your assets are exempt from the bankruptcy estate, and you should be able to keep your personal property, retirement assets, automobiles, home, and pretty much anything else within reason.

As a result of the Bankruptcy Code reforms in 2005, individuals wishing to file Chapter 7 must complete the means test, a series of calculations which take into account the income of an individual or household for the preceding six months, the median income for the locality, allowable living expenses, and the amount of unsecured debt.  The means test is without question the most significant change in the Bankruptcy Code in 2005.

To pass the means test, your monthly income must be below the median income for your state, or, alternatively, your available monthly income must be very small in proportion to your outstanding unsecured debt.  If you fail the means test, then you may be forced to file a Chapter 13 bankruptcy instead.

In Chapter 7 Bankruptcy, you are required to make at least one court appearance at your 341 Meeting of Creditors, often referred to simply as your “341.”  Prior to your 341, our office will accumulate and submit all the documents that the trustee requires, which should simplify the meeting.  The meeting is usually very brief, and the trustee will ask you a few simple questions regarding your finances.

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