Chapter 7 Bankruptcy, commonly called liquidation of your assets, is normally the simplest and quickest form of bankruptcy. It is available to individuals, married couples, corporations, and partnerships. A court-appointed trustee gathers and sells your non-exempt property and uses the proceeds from the sale to pay your creditors. Most Chapter 7 Bankruptcies are “no-asset” cases and the debtor will not have any non-exempt property for the trustee to sell.
Before you can qualify for Chapter 7 Bankruptcy you might have to take the Means Test. This test was implemented into law in the 2005. Means testing refers to the eligibility for debtors who have sufficient financial means to pay a portion of their debts.
The means test is perhaps best recognized in the United States as the test used by courts to determine eligibility for Title 11 of the United States Code. Debtors whose income is below the state’s median income are not subject to the means test. A Means Test calculator is provided to the debtors who are above the median income in their state, and it includes a formula designed to keep filers with higher incomes from filing for Chapter 7 Bankruptcy. Although a complicated formula, the bankruptcy means test is rather generous and many debtors have no trouble meeting its requirements.
The debtor or debtors wanting to file for Chapter 7 Bankruptcy will not only be subject to the means test for individual debtors but must not be a part of any of the following circumstances:
- An individual cannot file Chapter 7 Bankruptcy or any other chapter if during the preceding 180 days a prior bankruptcy petition was dismissed due to the debtor’s willful failure to appear before the court or comply with orders of the court, or the debtor voluntarily dismissed the previous case after creditors sought relief from the bankruptcy court to recover property upon which they hold liens.
- No individual may be a debtor under Chapter 7 Bankruptcy or any chapter of the Bankruptcy Code unless he or she has, within 180 days before filing, received credit counseling from an approved credit counseling agency either in an individual or group session.
- No debtor may file Chapter 7 Bankruptcy if they have sufficient income to pay their debts or their income is higher than the median income for their area.
- No debtor may file Chapter 7 Bankruptcy if they have defrauded their creditors. A bankruptcy court may dismiss their case if they think the debtor has tried to cheat their creditors or conceal assets.
Bankrupty can be used to discharge certain debts and may give an individual debtor a chance to start over. After filing bankruptcy, the debtor has no liability for discharged debts, although not all debts are discharged. Bankruptcy discharge also will not stop a lien on property. Under Chapter 7 Bankruptcy, a discharge is only available to individual debtors, not to partnerships or corporations. Nevertheless, Chapter 7 Bankruptcy can be a good remedy for businesses under certain circumstances.
Bankruptcy laws can be complicated. Contact a bankruptcy lawyer if you have questions. If you need relief from the stress of debt and you live in or around the metropolitan area of Syracuse, New York, contact us at www.betterbankruptcy.com .We will help you find a bankruptcy attorney who will answer your bankruptcy questions.
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