The bankruptcy laws in earlier times used to affect the debtor harshly as the creditors used legal and physical methods to get back their credits. But as time changed, new bankruptcy laws evolved as well as older ones were amended to make the laws more permanent and beneficial for both the debtors and creditors.
If you are facing a financial crisis then you should get the help of a bankruptcy lawyer that can help you understand the complexities of chapter 7 and chapter 13 and other procedures related to it.
About Chapter 7 Bankruptcy:
Chapter 7 bankruptcy: otherwise known as liquidation is most common and is proposed for the discharging of the unsecured debts such as medical bills, credit card debt, and unsecured personal loans. These types of bankruptcy can be completed within a period of months. It gives trustees, the ability to pay creditors by liquidating the non-exempt assets, although due to problem of absence of non-exempt assets among people who are filing the chapter 7 bankruptcy, the trustees are able to keep their property and can easily eliminate the debts which are unsecured.
Eligibility
The qualification for being eligible to file a chapter 7 bankruptcy is the debtor must be an individual, a corporation, a partnership or any other business entity. The first thing that will be done to check your eligibility is that your average income for 6 months earlier to the filling date and comparing it with the median earnings of the state in which you reside if your average income is below that median income then you are eligible to apply.
One another important eligibility criteria is to be able to discharge your non-exempt debts you should have unsecured debts such as consumer debts, medical bills, or payday loans.
There are certain conditions that make you ineligible and you should take care about these:
1. If you have enough disposable income to repay your debts , after cutting the allowed expenses and important debt payments for repaying small portion of the unsecured debts on a five-year repayment phase
2. If you have already attained a chapter 7 bankruptcy earlier within a time period of the last eight years prior to the time of filing.
Proceedings and working
The chapter 7 bankruptcy works on the concept that any of the secured assets a petitioner has will be handed over to an estate which is a legal that becomes the temporary owner of all secured assets and the creditor has no right to liquidate these assets until the case is over.