A voluntary bankruptcy case is a legal proceeding started by a debtor asking for some type relief specifically provided for by the federal bankruptcy code. Almost always the relief sought is debt relief and protection from creditors.
For individuals, two types of relief are typically used. The most popular is liquidation under Chapter 7 of the Bankruptcy Code. In a liquidation case, which is sometimes referred to as a straight bankruptcy, any substantial non-exempt assets of the debtor are converted to cash and distributed to creditors according to certain rules. The individual debtor ordinarily receives a discharge, which frees him or her from any responsibility to pay most debts and also provides various other protections. Most Chapter 7 cases are non-asset cases enabling debtors to keep all of their property throughout the bankruptcy case.
Chapter 7 liquidation allows a debtor to discharge or liquidate their unsecured debts at the conclusion of the case. However, the term Chapter 7 bankruptcy is often misunderstood. As a result there are a lot of myths about what a Chapter 7 is or what is permitted in a Chapter 7 bankruptcy proceeding. Some of the common myths out there are you cannot keep your home or your car in a bankruptcy. This is generally not true. It cannot stop a foreclosure on your home; that is another myth which is not necessarily true. Or you cannot discharge certain types of medical debts. Again these are all myths that are generally not true. A Chapter 7 enables the debtor to relinquish or discharge all types of unsecured debt provided they meet the qualifications for that type of discharge.
Chapter 7 bankruptcy has given many people the “fresh start” they need to get their financial affairs back on track. In recent years, those filing for chapter 7 bankruptcy protection has diminished somewhat, however Chapter 7 continues to be the chapter most often used and provides the help many debtors are seeking.
The Criteria of Qualification for a Chapter 7 Bankruptcy
Often time's people have misconceptions about what is needed to file for Chapter 7 bankruptcy protections. Any person residing, domiciled, or having property or a place of business in the United States may file a petition to start a chapter 7 bankruptcy case. To be eligible, the individual must, with certain limited exceptions, have completed a credit counseling course from an approved budget and counseling agency within the 180 days before filing the bankruptcy petition. This course is often available online and varies in price from ten dollars up to around fifty dollars. A person need not be broke to file for chapter 7 protections. A person, whether a citizen or not, may file a bankruptcy case even if the person does not reside in the United States, as long as the person has assets in the United States. Also, it is important to note that in limited circumstances a chapter 7 case may be dismissed by the court for “abuse,” and an individual whose income is above certain standards is subject to a means test to determine whether there is what the rules term “a presumption of abuse” based on the debtor's ability to repay his or her creditors.
An individual is not eligible to file a for Chapter 7 protection of the bankruptcy code if, within the preceding 180 days, (1) they were the debtor in a bankruptcy case dismissed for willful failure to abide by orders of the court or to appear before the court in proper prosecution of the case or (2) they requested and obtained a voluntary dismissal of a bankruptcy case following filing of a request for relief from the automatic stay provided by under the bankruptcy code. Also, if you have already received a discharge in a Chapter 7 bankruptcy, you must wait eight years from the date you filed the previous case before you can file another Chapter 7 and receive a discharge.
For more information on Chapter 7 Bankruptcy, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (855) 451-1260 today.
This is just general information and is not intended as legal advice. Everyone's situation is different and one should contact competent counsel about their specific legal issue!
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