Who qualifies for Chapter 7 bankruptcy protection?
Beginning on October 17, 2005, you must pass a means test to qualify for Chapter 7 bankruptcy. The Internal Revenue Service will now determine who can or cannot apply for bankruptcy. In this procedure, the IRS will compare your income and expenses to your standards by examining your income and expenditures.
If you earn significantly less than the state median for families of your size, you can automatically file for Chapter 7. If your income over the past six months has been greater than the average, and you can afford at least $6,000 over five years and $100 per month, you are not permitted to file for Chapter 7 and must file for Chapter 13.
Prior to filing for bankruptcy, you must pay for approved credit counseling and budget analysis under the new law. Counseling can be used to satisfy the majority of the regulations' pre-filing means tests. Before filing for Chapter 7, you can also assess your financial situation using online assessments.
How can I file Chapter 7?
Chapter 7 bankruptcy begins with the filing of a petition. You must complete all bankruptcy forms and include a list of all your creditors along with the amount owed to each. In addition, you must list your current income and all of your assets in a comprehensive inventory of your living expenses.
As soon as you register for bankruptcy, your creditors are prohibited from pursuing debt collection. The term for this is an automatic stay. The stay is designed to provide a brief respite from litigation while the court determines which debts may be exempt.
After you file for bankruptcy, it is up to your creditors to demonstrate to the bankruptcy judge why they should be allowed to continue their collection action.
Which obligations are dischargeable under Chapter 7?
Credit card debt, repossession deficiencies, accident claims, judgments, business debts, leases, medical claims, and personal loans may be dischargeable in a Chapter 7 bankruptcy. Other items that cannot be discharged in a Chapter 7 bankruptcy include recent taxes owed, student loans, child and family support, criminal sanctions, and any debts that were not discharged in a prior bankruptcy.
Before deciding whether bankruptcy is the best option for you, be sure to take your time and carefully consider all the financial repercussions such a decision will have on your future.""
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