Chapter 7 Bankruptcy
By Joseph P. Doyle
May. 6, 2011 11:35a
Chapter 7 bankruptcy is also referred to as the debt liquidation bankruptcy. With a Chapter 7 bankruptcy, the debtor is allowed to discharge most unsecured debt and gain a fresh start. In addition, the debtor will be required to surrender their non-exempt assets to the bankruptcy court so they can be sold to pay off creditors. In the vast majority of cases, most Chapter 7 filers do not have any non-exempt assets; therefore they are “no asset” cases and are not required to give up or liquidate any of their belongings.
The Bankruptcy Means Test
Due to recent 2005 changes to U.S. bankruptcy law, before people can file Chapter 7 bankruptcy, they must first pass the bankruptcy means test. The purpose of the bankruptcy means test is to reserve Chapter 7 bankruptcy for those debtors who really need it. The bankruptcy means test compares the debtor’s income to the median income of their state, for a family of their size.If your income falls below the median income for Illinois for a household of your size, then you automatically qualify. On the other hand, if the debtor’s income is above the median income and the debtor has enough disposable income in relation to their debts, then they will be referred to filing a Chapter 13 bankruptcy. For more information about bankruptcy, contact a Kane County bankruptcy attorney.
What Is Included in Chapter 7 Bankruptcy?
Most unsecured debt can be included in Chapter 7 bankruptcy such as: credit card bills, medical bills, utility bills, personal loans and certain taxes (over 3 years old). What cannot be discharged in bankruptcy is child support, alimony, student loans, court ordered fines, victim restitution and recent taxes.
Before you file your bankruptcy petition you will be required to take a short credit counseling course that is approved by the U.S. bankruptcy trustee 180 days prior to filing. The course typically costs $50 and can be completed in a few short hours. You can complete the course via telephone, online or in person. You are also required to complete a post bankruptcy debtor education course prior to receiving your discharge. The course is also available online, by phone or in person. Your Chapter 7 case will be discharged in approximately 6 months from the date of filing.
If you would like more information about bankruptcy, contact a Kane County bankruptcy lawyer from the Law Office of Joseph P. Doyle.
Contact a Kane County bankruptcy attorney from our firm for a free initial consultation.
Other Recent Articles
The two most common types of bankruptcy protection sought by individuals and families are Chapter 7 and Chapter 13 bankruptcy.
More Articles »
Many Chicago residents and those of other areas throughout the state, and in fact the nation, are battling overwhelming debt.
More Articles »
Payday loans issued by cash advance agencies are small loans taken out against one’s paycheck to tide consumers over until their next payday.
More Articles »