Bankruptcy is not a comfortable discussion to have for an individual or a business, which is why it is not a decision that should be made lightly. There are two types of bankruptcy that individuals and businesses have to choose from: Chapter 7 and Chapter 13. There are big differences between the two, but today the focus is on Chapter 7 and straight bankruptcy.
Straight bankruptcy is another name for the Chapter 7 federal bankruptcy law. Chapter 7 provides businesses, individuals and couples with debt the chance to start fresh in their lives. Straight bankruptcy allows those who file the chance to get rid of unsecured debt, which includes most purchases made on credit cards, so they can begin anew.
Straight bankruptcy does not expunge student loan debt, Internal Revenue Service (IRS) debt or criminal obligations. Debtors who file Chapter 7 bankruptcy will need to sell off their nonexempt assets in order to help repay their creditors for the debt they incurred. Exempt property cannot be acquired by the court and sent to creditors to pay for debt, which includes equity in a residence. Typically, vehicles are also kept by the person filing for bankruptcy.
Houses are kept by bankruptcy filers if they are not behind on mortgage payments when they file for Chapter 7.
Not just anyone can file for straight bankruptcy. Under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, says that you can only file if you earn less than the median income for the state in which you live. Only those who pass a means test can file for straight bankruptcy if they earn more than the state median where they live.
Debts that cannot be discharged with a straight bankruptcy include:
— Child support
— Debt due to fraud
— Tax debt
— Cash advances made within 60 days filing for bankruptcy
Visit our page today to learn more about straight bankruptcy and what it means for you or your business in Long Island, New York.