Chapter 7 bankruptcy or what is sometimes known as full bankruptcy or liquidation bankruptcy, is the most common form of bankruptcy filed in the United States of America. Chapter 7 bankruptcy is part of the US bankruptcy code, which is governed by federal law, not that of state law. Although some rules do change from state to state, such as what property is considered exempt and some local documents, chapter 7 bankruptcy is under the jurisdiction of federal law and follows these federal laws as stated in the US bankruptcy code. Liquidation refers to the requirement in chapter 7 bankruptcy that the debtor must surrender all nonexempt property to the U.S. Bankruptcy Court to the in order to make payments to his many creditors as possible. These creditors are then paid back by the U.S. Bankruptcy Court deemed on a priority basis which is spelled out in detail in the US bankruptcy code. Although it is important to mention that in the majority of chapter 7 bankruptcy case filings, most if not all of the debtor's assets or property will be considered exempt and you will be able to retain them after receiving your bankruptcy discharge. This allows the debtor to make a fresh start without the burden of debts they do not have the ability to repay. Understanding which assets or property are exempt under the bankruptcy code is very important you bankruptcy filing, especially if you have large assets such as a home. A bankruptcy attorney is advisable in almost every case to determine which exemptions should be used, as some states allow you to either choose between the federal exemptions or state exemptions, depending on which state you reside in.
In order to file chapter 7 bankruptcy, you must pass what is called The Means Test, which is essentially a test to determine if the chapter 7 bankruptcy laws are being abused by those who are not allowed to file chapter 7 bankruptcy. Essentially the means test is used to determine if youth fall within the proper category to file a chapter 7 bankruptcy petition. This is based both on the median income of the state you live in and on the size of your household, including all wage earners and all dependents. If you fall under the median average income for the amount of people in a household in your particular state, then you do not and need to pass the means test. If you are above the median income for your particular state, based on family size, then you must fill out the means test document. The means test takes into account all your income and places that against your allowed expenses, which are also dictated by the area you live in. After calculating your income and allowed expenses in the means test, if you still have $109.58 in disposable income you are not allowed to file a chapter 7 bankruptcy petition, and must file a chapter 13 bankruptcy petition, unless special circumstances arise.
I bankruptcy attorney can be invaluable when filing your chapter 7 bankruptcy petition. A bankruptcy attorney can help you determine if chapter 7 bankruptcy is the best course of action for your particular financial situation or if your situation would be better addressed through the use of credit card debt settlement or a mortgage modification. The number one reason that debtor's choose to file chapter 7 bankruptcy is that most if not all of their debts will be discharged and the individual will not have to pay back the debts, giving them a chance for a fresh start at a new life.
Before you decide to file a chapter 7 bankruptcy petition is always advisable to receive counseling from an experienced bankruptcy attorney. Another very important aspect of the chapter 7 bankruptcy petition is deciding when to file the bankruptcy petition. This is another crucial step in which a bankruptcy attorney's help would be critical to your bankruptcy filing petition. It bankruptcy attorney can help you determine if chapter 7 bankruptcy is the right choice for your particular situation based on your financial situation, income, expenses and assets.
For more information on chapter 7 bankruptcy, chapter 13 bankruptcy, credit card debt settlement and mortgage modifications please visit our website at: http://massachusettslawyeronline.com/