Knowing Chapter 7 Bankruptcy

By Author: Harvard McIntosh
Total Articles: 25
Comment this article

Chapter 7 bankruptcy is also known as straight bankruptcy or liquidation bankruptcy. This is the simplest form of bankruptcy that is available to individuals, married couples, partnerships and corporations. A trustee is appointed by the bankruptcy court to gather and sell all on exempt assets and dilute the proceeds to creditors. The debtors are able to keep all the exempt property.
Now an important question is – what is exempt property? The definition to exempt property may vary from state to state. There are certain exceptions with the property that can’t be diluted in case of the chapter 7 Bankruptcy. You are to check the list of exemptions that are listed in your state exemption list.
Here is a rough idea of what your exempt property can enlist (please refer your state list for clarity)
Your home, trade or professional tools and books, un-matured life insurance contracts, prescription health aids, social security, veteran’s benefits, disability, illness and unemployment benefits and proceeds from a judgment.
As per the 2005 act, under the new bankruptcy abuse prevention and consumer protection ...
... act, individuals now have more time to decide if they want to use state or federal exemption list. This rule was approved to prevent individuals from moving to a different state with a more generous exemption.
Most of the chapter 7 cases are no asset cases. That means there is no non exempt property to sell. You declare in your petition, whether your case is an asset or non asset and the burden lies with the trustee to prove otherwise.
How you qualify for Chapter 7 bankruptcy?
To qualify for the chapter 7 bankruptcy one has to go though the means test. Under this test your income and expenses are reviewed and compared to the standard set by the IRS of your area. If you earn less than the median income for a family of your size in your state, you can file for the Chapter 7 bankruptcy in Fort Worth. But if your income is more and you are able to pay some part of the debt, you can’t file for Chapter 7 Bankruptcy; instead you need to go for chapter 13 Bankruptcy in Fort Worth.
What debts are dischargeable under chapter 7 bankruptcy?
All unsecured debts – debts that aren’t secured by any property or security, are discharged. However the debtor has to pay the following unsecured debts -
Child security.
Student loan, unless some undue hardship exists as determined by the bankruptcy.
The debt created by fraud.
Tax debt, unless debtor meets certain criteria to discharge such debt.
When the debtor receives a discharge, creditors can no longer try to collect discharged debt.
When you are to file for bankruptcy, you need an experienced and qualified chapter 7 bankruptcy Attorney in Fort Worth who can offer you strong representation in the court. Also a good attorney can let you know if chapter 7 is the right option for your case.
When you need any help with filing bankruptcy in Fort Worth, you can simply log on to: http://bankruptcy.legalhelp.org