This fresh start has been provided for nearly 200 years and is based on the proposition that the debtor’s future income should belong to the debtor. None of the debtor’s federal or state rights are denied because they choose to file bankruptcy.
New statistics estimates that every 30 seconds someone is filing bankruptcy. Empower yourself with information, take advantage of your rights and reclaim your future free of debt. Although collection agencies may argue that you must repay your debt; the debtor has no liability for discharged debts which may include:
There are a few requirements that must be met before a Chapter 7 petition can be filed. These include the debtor’s income as it compares to their spending, the means test, and prior bankruptcy history. Another more obvious requirements is that the filing individual cannot be committing fraud against their creditors.
When it comes to income, the debtor’s income is compared against the average (median) income in their locality. If their income is less than the median, they are qualified to file for Chapter 7 bankruptcy.
However, if an individual’s income is more than the median income for their area, they will next have to qualify by the means test. The means test determines whether any income left over after paying expenses, known as “disposable income,” can be used to pay creditors.
In circumstances where a debtor’s disposable income is less than a certain amount, the individual can qualify for a Chapter 7 filing. On the other hand, if the court determines that there is enough money left over, the debtor will more than likely be required to file for Chapter 13 Bankruptcy.
The process of a Chapter 7 case usually begins with the debtor filing a petition with the bankruptcy court. Once the petition is filed the automatic stay comes into effect. The automatic stay stops any legal action or collection process from going forward. The petition is comprised of schedules, statements and declarations. The schedules include a listing of assets and liabilities, creditor information, income and expenses, contracts and leases. Statements include statements of financial affairs and Declaration about the debtor’s intention, credit counseling compliance and social security number.
When filing a Chapter 7 Bankruptcy petition, the debtor must provide the following:
Credit counseling services can be found at the US Deparement of Justice Credit Counseling and Debtor Education Information web page.
Anyone can qualify to file for bankruptcy. There isn’t an exact amount of debt or financial difficulty required. You don’t have to show insolvency or meet a certain standard.
You should always speak with a lawyer before beginning the bankruptcy process to ensure it’s the best option for you. Michelle Labayen is a knowledgeable and experienced bankruptcy attorney with offices in New York, NY, Miami, FL, and Newark, NJ.