Chapter 7 is one of the two most commonly filed chapters of bankruptcy. Many feel it’s preferable to a Chapter 13 as it lasts a few months as opposed to a few years. On the surface, this sounds like a good idea as the idea of dragging out a bankruptcy over a period of years doesn’t sound all that great. But not everyone can file under Chapter 7, and there are reasons why. A Chapter 7 bankruptcy attorney in Tucson can provide more information, but following are the basics behind this chapter.
Bankruptcy requires that the petitioner make a good faith effort to repay their creditors. In a Chapter 7, this is done through liquidation of assets. The bankruptcy trustee sells off your assets that have value in them in order to recoup money. You don’t lose everything you own, however, due to exemptions that keep certain assets away from the trustee. If you don’t have much in the way of assets after exemption, you are still able to file for bankruptcy and get debt relief.
In order to file under Chapter 7, you have to meet the criteria laid out in the means test. A general rule of thumb for eligibility is when your income is under the state median income. For example: the median income for the state of Arizona is $55,000 for an individual. If you make $45,000, you are under the median and are able to enter in a Chapter 7 without having to be concerned with a Chapter 13. In the event that you have assets you want to protect, you can discuss the issue with a Chapter 7 bankruptcy attorney in Tucson about how you can retain them.
The petition comes next, and you need to have your exemptions listed, a matrix of creditors filled out, and all of the schedules completed. This information is used by your trustee to determine if your debts are outstripping your ability to repay. In the event that the trustee agrees with your need for relief, he will send the petition forward and recommend it be discharged on the set date. Once the last day of your bankruptcy is passed, you get a discharge, and are free to rebuild your credit.