Why You Should Consider Chapter 7 Bankruptcy
Chapter 7 bankruptcy is much different from Chapter 13 bankruptcy in that it does not involve filing a repayment plan. Instead, the trustee for the bankruptcy will gather and sell the debtor’s assets that are not exempt and use the proceeds of the sales to pay any creditors according to the Bankruptcy Code provisions. Some of the property could be subject to mortgages and liens that pledge certain property to creditors. The Bankruptcy Code allows the debtor to keep some exempt property, but the remaining assets will be liquidated by the trustee. You need to understand that filing a Chapter 7 bankruptcy can result in the loss of some of your property.
Eligibility Requirements for Chapter 7 Bankruptcy
To qualify for a Chapter 7 bankruptcy under the Bankruptcy Code, the debtor must be either an individual, partnership, corporation or some other classification of business. The debtor will be subjected to the means test if he or she is an individual debtor, and whether the debtor is eligible or not will depend on his or her debts and whether they are insolvent or solvent.
You may also not qualify for bankruptcy if a prior petition for bankruptcy has been dismissed in the preceding 180 days and you failed to appear in court, comply with orders of the court, or chose to voluntarily dismiss the case when creditors attempted to recover property that had liens on them.
In addition, you will also not be allowed to file for Chapter 7 bankruptcy unless you have received credit counseling from an approved agency within 180 days of filing for bankruptcy. There are certain emergency exceptions where the bankruptcy trustee may determine that there are not approved agencies that are able to provide the necessary counseling. If, however, a debt management plan is developed, that plan must be filed with the court.
Alternatives to Chapter 7 Bankruptcy
You should be aware that there are sometimes alternatives available for financial relief besides Chapter 7 bankruptcy. For example, if you are engaged in a business, you may be able to file for relief under Chapter 11 of the Bankruptcy Code. Individual debtors that have consistent income may be able to qualify for debt relief under Chapter 13 of the Bankruptcy Code. This will provide you with the option to save your home by allowing you to catch up on any past due mortgage payments and avoid foreclosure.
If your monthly income is more than the state median, you will be required to take a means test to determine if you are eligible for Chapter 7 bankruptcy or if you will be required to file Chapter 13 instead. The median income in Georgia is $51,037 according to the U.S. Census Bureau. You should also be aware that agreements made with creditors outside of court may provide an alternative to filing for bankruptcy.
Seek the Counsel of an Experienced Bankruptcy Attorney
Ultimately the primary purpose of filing for bankruptcy is to discharge some of your debts and give you a fresh start. Depending on your situation, Chapter 7 bankruptcy may be the best option for you, or there may be other alternatives. That is where an experienced bankruptcy attorney steps in. The attorneys at Cornwell Law Firm have years of experience helping their clients seek financial relief through bankruptcy and they can help you too. Contact us today to schedule a free consultation and take your first steps to financial freedom.