Chapter 7 Bankruptcy Information

Commonly called liquidation proceeding, chapter 7 bankruptcy can be applied by those people who are deep into debt. A person who files for chapter 7 bankruptcy, loses all his property (there are exemptions though, which are mentioned below), and they are turned over to a bankruptcy trustee.

The bankruptcy trustee in turn sells the property and pays the creditors. All the debt of the borrower is written off, and as such the person gets a chance to start rebuilding credit score all over again. Usually chapter 7 bankruptcy is filed by people who are deep into debts and don't have an income source to pay the money borrowed.

As per law, a lawsuit can't be filed against a person who has filed for chapter 7 bankruptcy. Moreover, creditors are barred from calling debtors and demand that borrowers make payments. However, if you want to file for chapter 7 bankruptcy, there are certain requirements which you will have to meet, which are mentioned below.

Information on Chapter 7 Bankruptcy Qualification

There are several chapter 7 bankruptcy requirements which you need to meet. As per chapter 7 bankruptcy rules, the amount you earn every month can't be more than a certain limit. One of the most important chapter 7 bankruptcy information, which you need figure out, is your current income each month and compare it against the median income in your state. In doing this you also need to take into consideration your family size. Say if you are a five member family, then you need to get the figures of the median income of a five member family in your state, and then compare it to your monthly income. If your monthly income in less than or equal to the median income, then you can file for chapter 7 bankruptcy. Moreover, there is a chapter 7 bankruptcy mean test, which you can also go through to calculate whether you are applicable to apply for this type of bankruptcy.

Another important information on chapter 7 bankruptcy which you should know is, if you have filed for bankruptcy within the last six months, and your application was rejected at that time, you can't file for this type of bankruptcy again within that period. Once you have filed for bankruptcy, the matter goes to the courts, and it's the judges who decide whether you are eligible for chapter 7 bankruptcy. If the court believes that, you have filed for bankruptcy with the intent of cheating creditors, then they will reject your application. In addition to that, if the bankruptcy courts find out that you have unloaded your property to relatives or friends, and in the process hide them from creditors, then your application would be rejected. While filing for bankruptcy, the bankruptcy laws says that, if the courts find out that you have bought luxurious items, then the courts may reject your application. Another consideration that would be looked into is whether you have some disposable income, and if you have that, your application may be rejected and you may be ordered to apply for chapter 13 bankruptcy. There are several other rules on filing chapter 7 bankruptcy, which you should try and know so that you can get rid of all debts.

Chapter 7 Bankruptcy Exemptions

When you think of filing for chapter 7 bankruptcy discharge, you need to consider things which you can keep with you and those which you will have to give up. There are certain assets like home and car which you are allowed to keep.

There are other assets which you will have to give up, while there are some things for which you can claim bankruptcy exemptions. When you file for bankruptcy chapter 7 exemptions, you are allowed to keep your car, but the price of the car should be below a certain value. Moreover, you are allowed to keep your clothes and some necessary household items like furniture and appliances. If you are a pensioner, you can continue to receive the pension money. Other than these, you are allowed to keep unemployment compensation and a part of equity of your home.

So before you file for chapter 7 bankruptcy, you need to go through all the pros and cons, and see if it would benefit you. You can also get bankruptcy advice from an attorney who deals with such cases, and get all information on all the rules and regulations applicable.