New York residents who are struggling with debt may be interested in some information on Chapter 7 bankruptcy and the eligibility requirements for filing. By filing for Chapter 7, a person may get a fresh financial start to their lives.
A Chapter 7 bankruptcy involves liquidation of a debtor’s assets through a bankruptcy trustee. Not all of their assets are subject to this sale as certain items necessary to maintain an established standard of living are exempted. In exchange for this sale, the debtor’s applicable personal debt is discharged. Some debts, such as student loans, back taxes and child support, are not eligible for discharge, however. A debtor can reaffirm their liability for a debt before the debt is discharged in order to keep ownership of secured property, such as a home or car.
Debtors who are individuals, business entities or partnerships may all be eligible for a Chapter 7 bankruptcy. Eligibility is not contingent on the amount of the debt; there is no limit to the amount of debt that can be discharged in bankruptcy. The debtor must meet a means test, however. This means that a person filing for Chapter 7 must have a monthly income that is under the median income of the filer’s state. In addition, if the debtor has failed to appear, has not complied with a court order related to the bankruptcy within the prior 180 days or voluntarily dismissed a prior bankruptcy filing, they may not be eligible for a new Chapter 7 filing.
Understanding the bankruptcy process may be easier with the assistance of an attorney. The attorney may be able to assess the person’s personal debt and help determine whether or not filing for Chapter 7 is appropriate.
Source: US courts, “Liquidation Under the Bankruptcy Code“, August 20, 2014