What Is A Chapter 7 Bankruptcy?

During these uncertain times, many hard-working Americans find themselves overwhelmed by financial problems. It can happen to the best of people, no matter what tax bracket they qualify for. If you or anyone you know find yourself in these circumstances, it is crucial that all options of relief are considered. However, most people find that filing for Chapter 7 bankruptcy is the best alternative for financial relief.

How It Works

The most frequent type of bankruptcy is Chapter 7, which is also referred to as a “ “liquidation” bankruptcy, that cancels out your debts. The entire legal process takes about three months, costs $299 in court filing fees, and commonly requires only one visit to a hearing. The court proceedings will liquidate any non-exempt belongings of the borrower. Examples of exempt belongings that will avoid liquidation can be a house, car, tools of a business, or a number of approved, personal items. However, the exemption differs from the state and federal laws, so it recommended to clarify your state’s laws before filing. Once the non-exempt belongings are liquidated, the amount gained from selling the borrower’s assets are distributed amongst the creditors involved, in order to pay off the debt. After the proceedings, the court frees the borrower of all their dischargeable debts, giving them a fresh financial start.

The Automatic Stay

Sometimes referred to as “bankruptcy’s magic wand”, the automatic stay puts into effect an “Order For Relief” upon filing, which immediately puts a stop to most creditors who are trying to collect what you owe them. They cannot garnish your wages, go after your house or car, or cut off your utilities or welfare benefits.

Who Is Eligible

There are a few requisites for eligibility in a Chapter 7 bankruptcy case. Under the new bankruptcy laws, you must measure your current monthly income over the last six months against the median income of a family your size in your state. If your income is equal or less than the median income, you are eligible to file for a Chapter 7. If your income is over the median, you must pass “the means test”. The purpose of “the means test” is to judge whether you have enough disposable income to repay a portion of your debt over a five year period. If you have already obtained a discharge of your debts within the last eight years from a Chapter 7, or within six years of a successful Chapter 13 filing, you won’t be able to file for Chapter 7 bankruptcy.

How To File

To file for Chapter 7 bankruptcy, you will need to fill out a number of forms and file them with the bankruptcy court in your area. The forms will ask you to describe your property, income, living expenses, debts, personal property, and money spent and property owned and sold within the last two years. It is recommended that the first thing you do is call an accredited attorney in your area for a free debt consultation.

If you are seriously considering bankruptcy and you live in North Carolina , you need to consult with a North Carolina bankruptcy attorney. While the process appears complicated, a North Carolina bankruptcy lawyer will be able to help you understand your options and avoid making bad decisions that you could later regret. If you are over-burdened with bills and cannot see any light at the end of the tunnel, bankruptcy may be the best option to help you get that much needed clean slate and allow you to rebuild your future. Law Offices of John T. Orcutt specializes in bankruptcies. Every day, we help people get out from under debts from $10,000 to $1,000,000 and higher. So far, we’ve wiped out over 100 million dollars in debt. We even created the software that is now used by other leading bankruptcy law firms throughout the country! You need Law Offices of John T. Orcutt. No other law firm is better qualified to bring you the fastest debt relief, and do it right the first time.

Author: Carl Gustafson