Chapter 7 bankruptcy information is good to know, especially if you are considering bankruptcy for your business. Or, if you are planning to file chapter 7, you should understand the basics.
Also called straight bankruptcy, chapter 7 is about the liquidation proceeding. It involves the debtor who is expected to turn over all non-exempted properties to the bankruptcy trustee, who will convert them to cash for debt payment to all creditors.
After its accomplishment, the debtor receives a notice of discharge of all dischargeable debts, within four months. In most cases, if the debtor does not have assets to lose, chapter 7 provides the debtor a “fresh start”.
The chapter 7 bankruptcy information is all about giving a debtor a fresh start by wiping out his debts. To be honest, the guidelines that underline the reasons for you to file chapter 7 are not easy to accomplish. In order for you to qualify, you need to pass the chapter 7 Means test.
A Chapter 7 Means Test is a requirement, if you want to file for bankruptcy relief. You need to fill-out the official bankruptcy form 22A or the statement of current monthly income and calculations. On this form, you must provide information that would help determine your means to pay off debts.
You are required to provide your income and expenses details on that form. To support your income claims, you must give personal records. There is also some information that needs to be supported by requesting records from the Census Bureau and the Internal Revenue Services or IRS.
Understanding chapter 7 bankruptcy information will help you understand that the first stage of the means test is designed to determine whether your monthly average income in the past six months is below the median income for your State. If you can prove that it is, then you can file Chapter 7.
The second step is about not having a below-median income for your State. According to the bankruptcy law, you can still file for chapter 7 provided that your lawyer can make the calculation. He is also well-versed on the allowed expenses that can be used in the calculation.
The State Median Income is determined by your family size and the number of persons earning income within your family. The income varies per State. Check out with your local government to know about yours. You can also use the internet to download such information.
Knowing about bankruptcy law will also make you understand that you have to take an approved Credit Counseling Course within six months before you file chapter 7. There are few ways to do this.
You can ask your bankruptcy lawyer to help you sign up for the course. The internet is also an excellent source of information on accredited credit counselors. In some cases, such courses can be taken through the internet.
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