Chapter 7 bankruptcy is a liquidation proceeding where the court appoints a trustee to liquidate your assets for payment to your creditors. You assets include cash, vehicles, jewelry, antique, investments in brokerage accounts, and other possessions. Chapter 7 is often the simplest and quickest form of bankruptcy and is available to married couples, individuals, partnerships, and corporations.
Guide to filing for chapter 7 bankruptcy
If you are unable to pay your debts you should work with your chapter 7 bankruptcy lawyer and fill the necessary bankruptcy forms. You should fill forms that prompt you to list all of your assets and debts. You should also include your recent financial history. To make it easy for the court and trustee to pay your creditors, you should accurately list all the creditors and their mailing addresses. Experts recommend that you list all the debts even if the debts are nondischargeable or you intend to reaffirm the debt.
Eligibility for chapter 7 bankruptcy
While it’s recommended that you file for bankruptcy when you are unable to pay your debts, it doesn’t mean that you will be eligible for it every time you file. There are instances when you won’t qualify. Some of these instances include:
When your income is too high: To determine whether you qualify for bankruptcy the court undertakes a “means test” where the court compares your income for the last 6 months to the state’s median income. If your monthly income is equal or below the state’s median, you can go ahead and file for chapter 7 but if your income is higher than the median, you don’t qualify.
You had a bankruptcy case dismissed within the last 180 days: You will be ineligible for chapter 7 if your bankruptcy case was dismissed within the last 180 days.
There is proof of fraud: If there is proof of fraud such as proof of you transferring your property to friends and family members, purchasing luxury items, mutilating property or lying about your income or debt in the credit application, you won’t qualify for chapter 7.
Chapter 7 bankruptcy tips and tricks
To have an easy time when filing for bankruptcy, you should work closely with your chapter 7 bankruptcy attorney. Timing is of great importance when filing for bankruptcy. In some cases, you may have to delay filing while in some cases you will be better off rushing to file. Your attorney will guide you on what to do. To make the right decision you should work with an experienced professional.