Eligibility: Effective
for cases filed on or after October 17,
2005, federal
bankruptcy law
requires the application of a "means test" to determine if a debtor qualifies for relief under
chapter 7. Individuals who have
income equal to or below the state median income level
are generally eligible to file a chapter 7. If a debtor's income is
in excess of his/her state median income level, the
“means test” is applied. The means test is a
complicated formula which analyzes the debtor’s income
and expenses.
Chapter 7
is designed as a
liquidation requiring that the debtor give up
non-exempt property, which may include furniture,
jewelry, and household contents that are sold by a
trustee to pay creditors.
Debtors make an
election, subject to objection by the chapter 7 trustee
and creditors, regarding their non-exempt property. Creditors
can appear at the creditors’
meeting, which generally takes place 30 days after the
filing of the bankruptcy petition. After approximately
90 days
from the
bankruptcy filing, most debts
are discharged, assuming there are no objections filed
with the court and the consumer has completed a required
personal financial management course.
Chapter 7
Advantages: The debtor
is usually discharged from personal liability for
certain debts within a short period of time, usually 90
days.
Learn more
about Chapter 7 at:
The
US Courts
The
American Bankruptcy Institute
The
information contained on this website regarding
bankruptcy is intended as an overview and is not
intended to be comprehensive. Further, it is for
informational purposes only and is not to be
considered legal advice. You should consult with
an attorney for advice about your specific legal
situation.
