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What is Chapter 7 Bankruptcy?

What is Chapter 7 Bankruptcy?

Entering bankruptcy can be one of the most difficult decisions a person has to make. Every year, thousands of people in Florida request these types of resources because they find themselves in financial situations that they cannot sustain. One of the most common processes is called Chapter 7 bankruptcy. The name corresponds to the chapter number within the Florida Bankruptcy Code. This option is one of the most chosen, since it has simple requirements and represents a quick solution for financial problems. However, many people are not very clear about what Chapter 7 bankruptcy is. That is why we have made this guide with everything you need to know.

What is Chapter 7 bankruptcy and who can file for it

The Chapter 7 bankruptcy represents an important relief for those people who cannot face their debts. The process requires the approval of a bankruptcy court, upon request. In general, the process consists of a few simple steps. After the detailed presentation of the financial situation, the judge determines the liquidation of certain assets owned by the debtor. With the money obtained from the sale of these goods, the creditors are paid according to the amounts and characteristics of each particular debt. In this process, part of the debt can be forgiven according to what is determined by the authority, understanding the effort that it represents to settle those debts.

One of the main advantages of this process is that it immediately suspends any claim or legal action that a creditor may take. Then you will not have to deal with these problems. However, there are also some disadvantages. For example, your credit score may be in decline for some time. In addition, he will be obliged to sell part of his assets. And, finally, not all debts can be included in the Chapter 7 bankruptcy filing. Tax debt, student loan debt, and other debts will be left out of the settlement. Therefore, it is extremely important that you have the advice of a bankruptcy lawyer like Michael Brooks, to ensure that this is the best option for your case.

In addition to understanding what Chapter 7 bankruptcy is, it is also important to understand that not everyone can apply for this remedy. Individuals must meet certain qualification requirements. One of the most important is passing the means test. The purpose of this is to verify that the person does not have a high income, or at least enough to apply in other bankruptcy chapters. If the debtor has in the previous 6 months an income lower than the average of the state where he resides, he automatically qualifies for Chapter 7 bankruptcy. On the other hand, if his income is higher, he must demonstrate that it is not enough to pay his debts. debts. For this, both your income and your expenses, your family composition and your level of indebtedness are important. However, this is much more difficult to test.

The Chapter 7 bankruptcy process

Before applying for a Chapter 7 bankruptcy process, you must request a credit counseling by an agency certified by the state. This works as an informative step, and also as a reassurance that the bankruptcy decision is the most correct one. Then, the bankruptcy is filed with the corresponding court. You can even file without all the paperwork, but only in emergencies like foreclosure.

In order to understand what Chapter 7 bankruptcy is, you must know the information that the court will request from you in the process. You must inform both your debts, as well as your income and assets. Credit card debt, child support and alimony will also be required. All previous years’ tax returns, pay stubs, and monthly income and expenses will give you an idea of ​​your ability to pay. In addition, a list of assets, properties and debts contracted to understand the level of indebtedness that it has.

Once the case and the documentation have been presented, a trustee will be assigned to follow your case and answer any questions. By submitting the petition, payments to your creditors are automatically suspended. This also means that they cannot make any claim, legal action or lien against you during the bankruptcy process. Then a meeting will be arranged with the trustee and the creditors, in which you will have to answer questions about the documentation presented. From there, it is up to the judge to determine whether or not the request is approved. If accepted, it will be executed as scheduled. In addition, you must attend financial management training provided by a regulated agency.

The professionals who know the most about chapter 7 bankruptcy

Having legal help and advice can be essential to carry out this process. In the first place, because the trustee is nothing more than a judicial employee. Although he can advise you with what you need, he will not be there to defend your interests and find the solution that best suits your needs. Also, your creditors will likely have bankruptcy attorneys. They can adopt all kinds of strategies to make the process harder. So that you do not find yourself in an inferior position against them, the best thing you can do is to have your own bankruptcy attorney.

At Bankruptcy Now we have enough experience in similar cases to advise you in your bankruptcy process. The trajectory and solidity of Michael Brooks will guarantee you the best result, since it will help you make the best decision according to your financial situation and what you want to achieve. If you are looking for a Bankruptcy Attorney in Miami, please contact with Michael Brooks.

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