Chapter 7 banrkutpcy is the most popular choice for bankruptcy cases in the United States. Over 70% of the 1,530,078 bankruptcy filings during 2010 were filed under Chapter 7 of the Bankruptcy Code. Chapter 7 is often called a “straight bankruptcy” or a “liquidation” bankruptcy. Most Chapter 7 bankruptcy cases are over in about 4-5 months and with the debtor discharging unsecured debts while paying nothing to creditors.
A Chapter 7 debtor may be an individual, a partnership, or a corporation or other business entity. Contrary to some beliefs, there is no minimum or maximum debt limits for a Chapter 7 bankruptcy discharge. The federal Bankruptcy Code does set a limit on the amount of maximum debt an individual can have to qualify for a Chapter 13 case: $360,475 in unsecured debt and $1,081,400 in secured debts.
The debtor’s income plays a significant role in determining whether an individual debtor is eligible for Chapter 7 bankruptcy. In 2005 Congress re-wrote portions of the Bankruptcy Code and implemented a “means test” to determine if an individual or married couple is able to pay something to unsecured creditors during bankruptcy. A debtor who fails the means test is ineligible for Chapter 7 bankruptcy, but may be eligible to file Chapter 13.
An individual cannot file a chapter 7 case if a prior bankruptcy case was dismissed within the preceding 180 days due to the debtor’s willful failure to appear before the court, failure to comply with orders of the court, or if the debtor dismissed a previous case after creditors sought to have the bankruptcy stay lifted to recover secured property. Individual debtors are ineligible to file under any chapter of the Bankruptcy Code unless credit counseling is completed within 180 days before filing. There are a very few exceptions to this requirement.
Finally, while a debtor may be eligible to file a Chapter 7 case and receive bankruptcy court protection, the debtor is ineligible to receive a Chapter 7 discharge if the debtor had previously filed a bankruptcy case in which a discharge was granted. The limits for obtaining a Chapter 7 discharge are 8 years between Chapter 7 cases or 6 years between a Chapter 13 case and a Chapter 7 case.
Struggling with credit card or medical bill debt can negatively affect every aspect of your life. Call today and speak with an experienced bankruptcy attorney. Your attorney can help you decide on the best Chapter of the Bankruptcy Code to eliminate your debt nightmare.
To set up a free consultation, contact the offices of Haines and Krieger at 702-745-8088.