Who Can File Bankruptcy Chapter 7?

Some people refer to Chapter 7 bankruptcy as liquidation bankruptcy. Chapter 7 uses assets that are nonexempt and taken from the debtor. The courts then sell the assets to pay the creditors. Individuals who seek protection under Chapter 7 laws may have to forfeit most of their property in order to have the courts discharge their debts. If you are wondering who can file bankruptcy Chapter 7, debtors may file Chapter 7 bankruptcy if they meet the following qualifications:

• Pass a means test
• Have not defrauded their creditors
• Do not have a dismissal of a previous bankruptcy that is less than 6 months old

Credit Counseling Requirement

Individuals who can file bankruptcy Chapter 7 must undergo required credit counseling that the bankruptcy court and trustee have approved. The counseling can be conducted online, in person or by phone. The counselors will evaluate the debtor’s current financial state and then help the debtor create a realistic budget. The counselor and debtor also discuss alternatives to bankruptcy during this time.

Once the counseling has been completed, the debtor will decide if he or she still wants to continue with the bankruptcy. If so, the credit counseling agency will give the debtor a certificate of completion that can be shown to the bankruptcy court.

Chapter 7 Bankruptcy Means Test

An individual filing for bankruptcy must first pass a means test. This test is a formula that deducts expenses from a person’s income to determine the amount of disposable income the person has. The disposable income will decide if the individual has the ability or means to pay off debts. The means test helps to prevent debtors from filing Chapter 7 when they could actually set up a repayment plan through Chapter 13.

Defrauding Creditors

Debtors who have committed fraud will not be able to receive a Chapter 7 bankruptcy discharge. Your case may be dismissed if the court determines you:

• Placed assets in someone else’s name
• Sold property for a very low price
• Was untruthful about your financial situation
• Purchased expensive items prior to filing bankruptcy

It is always a good idea to discuss who can file bankruptcy Chapter 7 with a qualified bankruptcy attorney. The attorney will advise you on the best course of action to take to reclaim your financial future.

What is chapter 7 bankruptcy in simple terms? Determine if Chapter 7 is an option for you. If you are in the greater Atlanta area, get a free consultation with Douglas Jacobson Law Firm.