Bankruptcy Chapter 7
Worried about an imminent or possible liquidation? Then it is high time you know more on Bankruptcy Chapter 7. Bankruptcy Chapter 7 refers to those liquidation proceedings where in those non-exempt assets of a debtor, if any, are sold by the trustees appointed by government and the proceeds of these are distributed among the creditors. The distribution of the proceed follows a code specified in Chapter 7.
The mean test to qualify for filing Chapter 7
The mean test was adopted in Bankruptcy Code with the objective of defining the 'worthy' individuals who are entitled for the relief through Chapter 7 .It is mainly meant for individuals with primarily consumer debts. The average income of the debtor for the period of last six months is compared to that of the median income of households that are of the same size as the debtor’s. The debtor passes the mean test if the value if the income of ebtor is same or lesser than the state median income.
Steps to file Bankruptcy Chapter 7:
- Filing the official petition, statement of financial affairs and schedule
This prompts you to list all your assets and debts and is sure the most time demanding part while filing for Chapter 7.
- Finding a good lawyer to represent your case
It is always recommended not to self represent such type of a case under Chapter 7. Because the law prohibits corporations and partnerships to do that and the unwritten rules and local customs pertaining are not easy for the layman or even a generalist lawyer to decipher.
- The 341 meeting or the first meeting of creditors
It is imperative for the debtor to show up for this where the trustee might ask him questions on the assets under oath.
The course after the 341 meeting
The trustee and creditors will have a 60 day period after the 341 meeting, wherein they may file an adversary proceeding against the debtor. This can be done to challenge the debtor's right to a discharge (Bankruptcy code 727) or on the merit of a debt to be discharged (Bankruptcy code (a) (2) ,(4), (6) and (15)
If no action is filed with the court to deny the debtor of the discharge in the sixty day period, the court can issue the discharge of debts at a shortly after the above period expires.
If there is a failure to get the class and to file the certificate of completion for that, the case may result in being closed without an entry of the discharge and the court can even levy a fee next time for reopening of the case and further proceedings.
There are even opportunities for securing your debts after a bankruptcy. Bankruptcy Chapter 7 does offer a breathe of relief to all those hapless consumers but before you plunge in to obtain one for yourself , it is always better to know your basics right and tread wise.
