Know All TheChapter 7 Bankruptcy Rules

Overview

In Chapter 7 Bankruptcy, cases involve payment to creditors by selling the liquid and nonexempt assets of the debtor, unlike Chapter 13, where you have to file for a plan of repayment. Nonexempt assets may include excess equity on the debtor’s home and car. Thus, Chapter 7 may lead to a loss in your property holdings.

Eligibility Criteria

To qualify for relief by filing under Chapter 7, the debtor must be an individual, organization or any other business entity, irrespective of the amount of the debtor whether the case involves solvency or insolvency. An individual case filed under Chapter 7 usually results in the discharge of debts, but some types of debts cannot be discharged, and the right to discharge is not absolute.

Income is another important criterion for Chapter 7 eligibility. The debtor must have a legitimate source of income, which should be either equal or below the median income in his/ her state.

Who are ineligible for filing under Chapter 7?

Any debtor who falls under these categories is rendered ineligible for filing for bankruptcy. The ineligibility for filing Chapter 7 Bankruptcy Rules are-

·         Within the last six years, debt was discharged under Chapter 13

·         Within the last eight years, a former debt was discharged under Chapter 7

·         Debtor’s expenses, income and debt suit for Chapter 13 filing

·         Debtor tried to fraud the bankruptcy court or the creditors

·         The debtor failed to show up for credit counselling session

How can you file for Chapter 7?

To file for relief under Chapter 7, you must attend all the credit counselling sessions with a firm approved by the United States Trustee. After completion of counselling, you can file for bankruptcy at any local court of law. However, there is a cost associated with the filing. Make sure you have reliable and experienced legal aid by your side at all times.