Chapter 7 – Bankruptcy Basics
This chapter of the Bankruptcy Code provides for “liquidation” – the sale of a debtor’s nonexempt property and the distribution of the proceeds to creditors.
Debtors must realize that there are several options to phase 7 relief. For instance, debtors that are engaged in service, consisting of firms, partnerships, and also sole proprietorships, may favor to stay in service and avoid liquidation. Such debtors need to take into consideration filing a request under chapter 11 of the Bankruptcy Code. Under chapter 11, the debtor may look for an adjustment of debts, either by reducing the financial debt or by extending the time for payment or might seek a more comprehensive reconstruction. Sole proprietorships might additionally be qualified for alleviation under phase 13 of the Bankruptcy Code.
In addition, individual debtors who have regular income may seek an adjustment of debts under chapter 13 of the Bankruptcy Code. A particular advantage of chapter 13 is that it provides individual debtors with an opportunity to save their homes from foreclosure by allowing them to “catch up” past due payments through a payment plan. Moreover, the court may dismiss a chapter 7 case filed by an individual whose debts are primarily consumer rather than business debts if the court finds that the granting of relief would be an abuse of chapter 7. 11 U.S.C. § 707(b).
If the debtor’s “current monthly income” (1) is more than the state median, the Bankruptcy Code requires an application of a “means test” to determine whether the chapter 7 filing is presumptively abusive. Abuse is presumed if the debtor’s aggregate current monthly income over 5 years, net of certain statutorily allowed expenses, is more than (i) $12,850, or (ii) 25% of the debtor’s nonpriority unsecured debt, as long as that amount is at least $7,700. (2) The debtor may rebut a presumption of abuse only by a showing of special circumstances that justify additional expenses or adjustments of current monthly income. Unless the debtor overcomes the presumption of abuse, the case will generally be converted to chapter 13 (with the debtor’s consent) or will be dismissed. 11 U.S.C. § 707(b)(1).
Debtors should also be aware that out-of-court agreements with creditors or debt counseling services may provide an alternative to a bankruptcy filing.
Chapter 7 Eligibility
To certify for alleviation under phase 7 of the Bankruptcy Code, the borrower may be a specific, a collaboration, or a company or other organisation entity. 11 U.S.C. § § 101( 41 ), 109(b). Subject to the ways test described over for specific debtors, relief is available under phase 7 irrespective of the amount of the borrower’s financial obligations or whether the borrower is solvent or insolvent. A person can not file under phase 7 or any other phase, nevertheless, if throughout the coming before 180 days a previous personal bankruptcy application was rejected because of the borrower’s unyielding failing to appear on trial or abide with orders of the court, or the borrower voluntarily dismissed the previous case after financial institutions looked for relief from the personal bankruptcy court to recuperate residential or commercial property whereupon they hold liens. 11 U.S.C. § § 109(g), 362(d) and also (e). On top of that, no person might be a borrower under phase 7 or any type of chapter of the Bankruptcy Code unless he or she has, within 180 days prior to filing, got debt counseling from an approved credit scores counseling firm either in a private or team briefing. 11 U.S.C. § § 109, 111. There are exceptions in emergency situation scenarios or where the U.S. trustee (or bankruptcy administrator) has actually determined that there want accepted agencies to supply the needed counseling. If a financial debt administration strategy is developed during called for credit counseling, it needs to be filed with the court.
The debtor has no responsibility for discharged financial debts. In a chapter 7 situation, however, a discharge is only readily available to specific borrowers, not to partnerships or firms. A specific phase 7 instance generally results in a discharge of financial obligations, the right to a discharge is not absolute, and some kinds of financial obligations are not discharged.
Start Your Relief Process Today by Contacting a Texas Bankruptcy Attorney
- Bankruptcy Attorney
- Chapter 7 Bankruptcy
- Chapter 13 Bankruptcy
- Asset Protection
- Creditor Harassment
- Debt Lawyer
- IRS Debt Attorney
- Loan Modification Lawyer
- Student Loan Debt Lawyer
Areas we service in Texas
Houston | San Antonio | Dallas | Austin | Fort Worth | El Paso | Arlington | Corpus Christi | Plano | Laredo | Lubbock | Garland | Irving | Amarillo | Grand Prairie | Brownsville | McKinney | Frisco | Pasadena | Mesquite | Killeen | McAllen | Carrollton | Midland | Waco | Denton | Abilene | Odessa | Beaumont | Round Rock | Richardson | Pearland | College Station | Wichita Falls | Lewisville | Tyler | The Woodlands | San Angelo | League City | Allen | Sugar Land | Edinburg | Mission | Longview | Bryan | Pharr | Baytown | Missouri City | Temple | Flower Mound | New Braunfels | Atascocita | North Richland Hills | Conroe | Victoria | Cedar Park | Harlingen | Mansfield | Georgetown | San Marcos | Rowlett | Pflugerville | Port Arthur | Spring | Euless | DeSoto | Grapevine | Galveston | Bedford | Cedar Hill | Texas City | Wylie | Keller | Haltom City | Burleson | Rockwall | The Colony | Coppell | Huntsville | Sherman | Duncanville | Weslaco | Hurst | Channelview | Lancaster | Friendswood | Little Elm | Schertz | Leander | Texarkana | Mission Bend | San Juan | Lufkin | Del Rio | Kyle | Rosenberg | La Porte | Nacogdoches | Deer Park | Waxahachie | Socorro | Copperas Cove | Farmers Branch | Fort Hood | Cleburne | Southlake | Harker Heights | Big Spring | Eagle Pass | Weatherford | Seguin | Lake Jackson | Cibolo | Greenville | Kingsville | Alvin | Colleyville | Balch Springs | Timberwood Park | Paris | University Park | Sachse | Watauga | San Benito | Corsicana | Marshall | Cloverleaf | Denison | Kerrville | West Odessa | Hutto | Benbrook | Brushy Creek | Midlothian | Saginaw | Converse | Canyon Lake | Corinth | Plainview | Murphy | Belton | Fresno | Stephenville | Universal City | Dickinson | Angleton | Alice | Orange | Horizon City | Alamo | Brownwood | Ennis | Bellaire | Stafford | Forney | Palestine | Pampa | Cinco Ranch | Bay City | South Houston | Nederland | White Settlement | Terrell | Taylor | Mercedes | Pecan Grove | Brenham | Donna | Uvalde | Gainesville | Katy | Highland Village | Portland | Sulphur Springs | Mount Pleasant | Prosper | La Marque | Seagoville | Sienna Plantation | Alton | Groves | West University Place | Gatesville | Humble | New Territory | Addison | Aldine | Live Oak | Hereford | Dumas | Kilgore | Canyon | Jacksonville | Crowley | Mineral Wells | Rio Grande City | Hewitt | Lakeway | Four Corners | Levelland | Andrews | Rendon | Seabrook | Hidalgo | Buda | Boerne | La Homa | Henderson | Lockhart | Beeville | Santa Fe | Borger | Forest Hill | Athens | Port Neches | Greatwood | Lumberton | Port Lavaca | Freeport | Richmond | Glenn Heights | Red Oak | Wells Branch | Snyder | Trophy Club | Azle | El Campo | Robstown | Tomball | Robinson | Royse City | Anna | Clute | Leon Valley | Galena Park | Raymondville | Webster | Fredericksburg | Burkburnett | Vidor | Sweetwater | Jacinto City | Eidson Road | Vernon | Rockport | Roma | Bellmead | Bonham