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Bankruptcy – What is Chapter 7?

A Federal Court proceeding involving a person or business that is unable to repay outstanding debts. The bankruptcy process begins with a petition filed by the debtor.

Chapter 7 is used by individuals, partnerships, or corporations that cannot pay their bills and debts. In chapter 7 cases, the debtor’s estate is liquidated under the rules of the Bankruptcy Code. Liquidation is the process through which the debtor’s non-exempt property (if any) is sold and the proceeds are distributed to creditors.

Upon the successful completion of a Chapter 7 Bankruptcy proceeding, the individual debtor is discharged, in other words, relieved of the debt obligations incurred prior to filing for bankruptcy. In a Chapter 13 Bankruptcy proceeding the debtor is allowed to keep his property and enter into an extended payout plan

Bankruptcy offers an individual or business a chance for a fresh start by forgiving debts that can’t be paid.

Issues associated with the preparation and filing of a Bankruptcy proceeding are complicated and time consuming, Parties should speak with an attorney before proceeding. We offer complimentary-no obligation consultations. You are welcome to schedule your consultation by calling us at 212-921-1600.

ELIGIBILITY REQUIREMENTS TO FILE FOR BANKRUPTCY UNDER CHAPTER 7 AND OBTAIN A FRESH START

To file a Chapter 7 Bankruptcy, the debtor may be an individual, a partnership, or a corporation or other business entity.

Individuals must pass a “means test” to determine if they have a sufficiently small amount of income based on household size and location to file for Chapter 7.

Individual debtors who qualify for relief under Chapter 7 may file for Bankruptcy regardless of the amount of their debts.

An individual cannot file under Chapter 7 or any other chapter, if during the preceding 180 days a prior Bankruptcy petition was dismissed due to the debtor’s failure to appear before the court or comply with orders of the court, or the debtor voluntarily dismissed the previous case.

In addition, no individual may be a debtor under chapter 7 or any chapter of the Bankruptcy Code unless he or she has, within 180 days before filing, received credit counseling from an approved credit counseling agency either in an individual or group briefing.

The primary purpose of Bankruptcy is to discharge debts so as to give an honest individual debtor a “fresh start.” The debtor has no liability for discharged debts.

Issues associated with the preparation and filing of a Bankruptcy proceeding are complicated and time consuming, Parties should speak with an attorney before proceeding. We offer complimentary-no obligation consultations. You are welcome to schedule your consultation by calling us at 212-921-1600.

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