Chapter 7 Bankruptcy
From time to time someone may become bankrupt. As there are different forms of bankruptcy the person will need to decide what type of action to take. For the person who is unsure about the type of bankruptcy filing action to take they need to discuss with their lawyer all of the different courses and options that can help. One type of bankruptcy that is well known is that of the chapter 7 bankruptcy.
This bankruptcy claim deals with consumer bankruptcy. In consumer bankruptcy you don’t have enough money to pay off your creditors. To give you some time to recover from this problem and to help appease your creditors you can file for a chapter 7 bankruptcy claim.
In this claim all of your property that is not exempt from credit payment will need to be turned over to the bankruptcy trustee. This person will proceed to convert this property into cash. Once all of your property has been liquidated into cash it will be distributed among your creditors.
There are certain people who can file for a chapter 7 bankruptcy claim. These people are those who live or have a residence in the US. People who work, own property in the US or a municipality of the US.
You can also file for chapter 7 bankruptcy if you have not filed for a chapter 13 plan or you have not had a chapter 7 bankruptcy filed during the last 6 years. On the other hand if you have had a bankruptcy claim dismissed with a reasonable reason and cause then you will need to wait for 180 days before you can file for chapter 7 bankruptcy.
When you decide to declare that you are bankrupt this fact must be verified by your lawyer. A means test will be used to prove that you are in fact in financial trouble which can only be solved by a chapter 7 bankruptcy declaration.
The means test that you will have to undergo will see if your monthly earnings are more than what is the norm for your state. Your cost of food, rent, mortgages and other living expenses are deducted from your monthly income.
If the IRS finds that your monthly salary is $100 less than your state’s median wages then you have the right to claim chapter 7 bankruptcy.
With chapter 7 bankruptcy almost all of your debts will be erased and you have the chance to start your life and business matters up again. You will however need to rebuild your credit reputation.
As chapter 7 bankruptcy can remain on your public record for more than 10 years you might want to think about using this bankruptcy filing only as a last resort.