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Chapter 7 bankruptcy

Eligibility: Effective for cases filed on or after October 17, 2005, federal bankruptcy law requires the application of a "means test" to determine if a debtor qualifies for relief under chapter 7. Individuals who have income equal to or below the state median income level are generally eligible to file a chapter 7. If a debtor's income is in excess of his/her state median income level, the "means test" is applied. The means test is a complicated formula which analyzes the debtor's income and expenses.

Chapter 7 is designed as a liquidation requiring that the debtor give up non-exempt property, which may include furniture, jewelry, and household contents that are sold by a trustee to pay creditors. Debtors make an election, subject to objection by the chapter 7 trustee and creditors, regarding their non-exempt property. Creditors can appear at the creditors' meeting, which generally takes place 30 days after the filing of the bankruptcy petition. After approximately 90 days from the bankruptcy filing, most debts are discharged, assuming there are no objections filed with the court and the consumer has completed a required personal financial management course.

Chapter 7 Advantages: The debtor is usually discharged from personal liability for certain debts within a short period of time, usually 90 days.

Learn more about Chapter 7 at:

The US Courts

The American Bankruptcy Institute

The information contained on this website regarding bankruptcy is intended as an overview and is not intended to be comprehensive.  Further, it is for informational purposes only and is not to be considered legal advice.  You should consult with an attorney for advice about your specific legal situation.

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