Chapter 7 Bankruptcy is a federal judicial process where you can have your debts discharged. This chapter of the bankruptcy code provides for liquidation of assets, which means that you may have to sell your non-exempt property to be distributed to your creditors before your debts are discharged. To qualify for a protection under chapter 7 you must meet the means tests. The means test provides an average income level per household based on the number of members in the home. Income falling below the average for the state you live in qualifies you to file under Chapter 7 no matter how much debt you have.
If your income is above the average for your state you must prove that you do not have enough disposable income to repay your debt. Your disposable income is determined by analyzing you income and expenses. Before you file your case. you must take a credit counseling course provided by an approved credit counseling agency. You must also provide a copy of the certificate as proof that you completed the course. Furthermore, you will need to file your petition and accompanying schedules, as well as provide a copy of your most recent tax return to the trustee assigned to your case.
Bankruptcy courts charge a filing fee for opening a case, however, if you cannot afford the filing fee and your income is below 150% of the poverty line, you may be able to qualify for a fee waiver. Once you file, you automatically receive protection from your creditor. A bankruptcy filing places an automatic stay on creditor, which prevents them from taking any further collection activity against you, including repossession your car.
Bankruptcy cases are very complex and time consuming matters, involving many court proceeding. An experienced bankruptcy lawyer may be able to help you determine whether you meet the means test to qualify under Chapter 7. Additionally, a lawyer may be able to assist you in protecting you assets by filing for exemptions on the property you own without having to sell any property. If you are considering filing for bankruptcy. you should contact a lawyer for a consultation.