Posted on: 20 January 2016
If you are in serious financial trouble, then one of your options is to file for bankruptcy. However, bankruptcy isn't right for everyone, so you should get all the information that you can before proceeding. To give you a better idea of your options and what they entail, here is an overview of Chapter 7 bankruptcy:
What is Chapter 7?
The basic idea behind Chapter 7 is that some of your assets will be sold, and the proceeds will be used to pay your creditors. However, you will be allowed to keep certain assets that are exempt.
How does the process work?
When you file, your case will be given to a trustee, who is appointed by the court to mediate the conflict between you and your creditors. To this end, the trustee will first arrange a meeting between you and your creditors, where the details of the bankruptcy will be discussed.
In a Chapter 7 case, the trustee is going to check on all of your nonexempt assets to see how much they are worth, this will then be used to sell the assets off. The money from that transaction will be distributed among the debtors by the trustee.
How do you benefit?
As is the case with bankruptcy in general, your goal here is to relieve yourself from as many debts as possible. Luckily for you, Chapter 7 does absolve you of the responsibility of paying back a wide array of debts.
While Chapter 7 doesn't get rid of all loans by default (student loans for example), there are specific cases where you can get those loans included in your discharge. For example, if you can prove that the payment of your student loans is causing you undue hardship, then you have a shot at freeing yourself from their obligations.
Does everyone qualify for Chapter 7?
It may seem like a great opportunity, but Chapter 7 isn't available for everyone.
First of all, you need to make less than the median income in order to qualify for Chapter 7 immediately. If you make over the median, then the court will look into your financial situation in the past in order to determine whether you are trying to game the system. As long as your monthly income has been below a certain threshold over the past several years, you can still file for Chapter 7.
There are some other requirements, including that you have not had a bankruptcy case dismissed in the last 6 months and that you have not defrauded your creditors.
To learn more about debt relief, contact an attorney like Dennis Lee Burman Attorney at Law.Share