Chapter 7 Bankruptcy

In short, Chapter 7 bankruptcy is quite simple. You may no longer need to see a judge or enter a courtroom. Each case will be provided with a lawyer and a bankruptcy agent that you need to attend an “interview." The purpose of the “interview" is to verify that you have a faithful representation of your assets, income, and debt. When the “interview" is done, the guardian advises the court and recommend the discharge of all debts that are eligible and which of your property will remain. Final court order or the discharge is usually issued within 60-90 days.

The Chapter 7 bankruptcy is part of the bankruptcy code in the United States in connection with the sale of assets, meaning that the proceeds from the sale of all non-exempt property by a court-appointed administrator will be used to repay the creditors. In return, the debtor will be released from all debts and creditors will be ordered to stop their attempts to recover debts in the discharge.

Once the debt has been released, the debtor will always be exempted from the obligation to pay. Some debt cannot be discharged, for example, taxes, alimony, student loans, debt that are not listed in Chapter 7 petition and debt contracted as a result of deceiving or cheating creditors.

Bankruptcy Eligibility of Chapter 7

In its simplest form, there are two different standards for determining eligibility for Chapter 7 bankruptcy filing – property and income.

Regarding property, in some states, such as in the State of New York, including Queens, Nassau, and Suffolk, a person is allowed to protect their basic assets from creditors. These are called exempt property or exceptions. As long as the property does not exceed the legal limit value, you will meet this criterion.

Please take note that on 22 January 2011, the legal exception in the State of New York has increased and will constantly increase every three years since 2011. In particular: (a) the owner can now protect up to $ 165,000.00 of their share of equity in their primary residence. And (b) the lessee may protect approximately $ 13,000.00 in liquid assets, including the right to request payment.

With respect to income, under bankruptcy law, most individuals or couples seeking protection under Chapter 7 must meet certain eligibility criteria as part of the “test".

According to the test method, you must first determine if the average monthly income of all your sources of income for a period of six months prior to submission is under the median income depending on the size of your household. If your average monthly income for a period of six months show that it is less than the median income for your state, the first hurdle has been passed. As long as you meet the eligibility requirements you can apply for protection under Chapter 7 bankruptcy.

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