Filing for Chapter 7 bankruptcy protection is the most common way of filing for bankruptcy in the U.S. There are several types of bankruptcy protection in USA, all of which are delineated under Title 11 of the United States Code. Under Chapter 7, the debtor is freed from all debt obligations to their creditors.
Filing for Chapter 7 includes the debtor submitting a petition to the bankruptcy court for their state and district, normally with the help of an experienced bankruptcy lawyer. The debtor's attorney will make positive that they retain the maximum amount of their property under the bankruptcy law of the state in which the debtor resides. Before debtors could file for any chapter of bankruptcy protection, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 needs that debtors attend credit counseling at an approved not-for-profit credit counseling agency at least 180 days before filing for bankruptcy. The Act also needs debtors to pass a means examination in order to qualify for Chapter 7 bankruptcy protection.
The means examination consists of measuring the debtor's salary average over the previous six months against their state's median income average for a family of the debtor's size. For instance, in Wyoming the median average income for a family of four is if the debtor's family had less than that amount in average income over the past six months, the debtor would qualify for Chapter 7 bankruptcy protection. For the debtor to successfully file, they have to prepare several statements of their economic condition and file them with the bankruptcy court for their district.
A bankruptcy hearing isn't a trial, presided over by a judge and argued over by attorneys. A bankruptcy hearing is overseen by a bankruptcy trustee, who executes the bankruptcy law under the authority of the Department of Justice's Bankruptcy Trustee Program. It is the trustee's job to take the debtor's non-exempt belongings, sell off them, and repay their creditors. The trustee is also responsible for verifying the debtor's status and producing sure that the petition is legitimate. After the hearing is over, the debtor will be notified in writing when their debts have been discharged. This notification is usually an official notice of remove informing the debtor that they are freed of the need to repay their debts.
The debtor has now successfully completed filing for bankruptcy and is legally protected from being harassed by debt collection agencies. The debtor could now begin taking steps to repair their financial life, especially their credit rating. Filing for bankruptcy is always a last resort. It’s in the debtor's best interests to seek and attempt every possible alternative before filing for bankruptcy. Bankruptcy protection should only be sought when it becomes clear that the debtor is no way able to fulfill their obligations towards their lenders. Unfortunately, this is an all too common situation in times of economic unrest. Seek out professional legal help in order to maximize the asset exemptions and secure the debtor from any legal loopholes.
