Why You Will Never Qualify For Chapter 7

Chapter 7 is known as ‘straight’ or ‘liquidation’ bankruptcy. In this, almost all your debts are cleared as your property and the assets are sold at the rate to pay your creditor.

It may be that your property is protected and you have not to sell it. You may be in stress because you have been caught in debt because of long illness, being jobless, divorce or your credit card is going out of control. Constant calls and letters from the creditors make your heart sink. You feel to suicide or are unable to understand where to go and what to do.

Consult your lawyers. They will help you to take out your boat from the middle of the sea. Chapter 7 gives immediate relief to the debtors. If your income is below median income, your lawyer will protect all of your assets. Under the law, lawsuits and all creditor harassment should immediately be stopped. When you file for bankruptcy, your lawyer will discuss your financial situation and collect necessary information. He will analyze your assets if you can keep them and scrutinize your debts if they can be discharged. They will conduct a means test.

Means test is a mathematical calculation which determines whether the debtor’s declaration for chapter 7 bankruptcy is based on income or there is any other reason and if you qualify this test, you can qualify for chapter 7. As soon as the lawyer files a suit, collection activity stops including lawsuits, garnishment and creditor’s calls and phones. After filing the suit, if a creditor continues his activities of collection, he may be penalized. Along with the petition, debtors must also deposit the lists of assets and expenses, a statement of income, a list of debts and other information regarding financial position.

About sixty days later, there is a meeting where your creditors can raise objection against your bankruptcy though it is rare. This meeting is 341 hearing at the local bankruptcy courthouse. They discuss all the points. Sometimes, after this meeting, the court issues an order to emancipate or to do away with your debt. Generally, this process takes six months. After this hearing; the trustee will liquidate your non-exempted property. He can not sell your exempted assets. In this way, the debtor can save some of his assets like automobile or any other asset.

If he does not have any non-exempted assets or his non-exempted assets are not sufficient to pay his debt, his debt is discharged. At the same time, it is also to be remembered that loans like student loans and child support cannot be discharged. Before the court discharge your debts, it is necessary for the debtor to complete ‘debtor education course’ so that he may learn how he is to make the best use of his assets in the future. It will teach him how to use his credit card and how to avoid bankruptcy in the future. So leave to worry that you will never qualify for chapter 7.