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Filing Under Chapter 7 Bankruptcy

According to the United States Department of Justice nearly 90% of all cases are filed under either Chapter 7 or Chapter 13 bankruptcy. Chapter 7 bankruptcy is known as the fastest way to satisfy debt, and is available to both consumers and businesses. Through the Chapter 7 bankruptcy process, a trustee, or a court appointed representer of of the debtor, sells the non-exempt assets to the creditor(s).

What kind of person is eligible for Chapter 7 bankruptcy?

The main factor contributing to a debtor’s eligibility is income. If total income is less than the median income of the state (which various significantly) then there is immediate acceptance into the Chapter 7 bankruptcy process. However, a person can still file if they make more than the median income. Those individuals are required to take the means test, which is based on having little disposable income. According to Birmingham bankruptcy lawyer, other requirements include, appearing in a court/complying to court law and going through credit counseling.

What are the pros/cons of Chapter 7 bankruptcy?

While Chapter 7 bankruptcy is fairly quick in resolving a debtor’s finance issues and has high eligibility, there are certain downsides. One benefit to selling assets is that a debtor is allowed to exempt some, making the process easier emotionally. Exempt assets include those with sentimental value like a family heirloom. However, filing under Chapter 7 will take away all credit cards in addition to any other non-exempt luxury items. One may also be obligated to pay other debts such as a mortgage, making it almost impossible to get another mortgage if needed. Overall, one should educated themselves on the matter and contact a qualified attorney before they handle the complex issue of bankruptcy.

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