Most people who file bankruptcy think they can easily get out of debts by filing a chapter 7 type of bankruptcy. But they get disappointed when they are not eligible to file a chapter 7. One thing you must note is that it is difficult to file a chapter 7 type of bankruptcy after the new changes in the bankruptcy law made effective last October 2005. The reason why this new bankruptcy law was hard on bankruptcy especially chapter 7 is because prior to the changes in the bankruptcy law last October 2005, many people took advantage of the liberty of filing chapter 7.
So what is chapter 7? Chapter 7 is a type of bankruptcy that is known as a straight or liquidation type of bankruptcy. Chapter 7 eliminates debt through liquidation of the properties of the debtor. The proceeds gained through the liquidation process are distributed to the creditors. The debtor, however, can keep properties that are categorized as exempt properties stated under the law; other properties that are not exempt will all be subject to liquidation. The debts that exceed the amount of the proceeds gained in the liquidation process are considered to be forgiven or simply canceled and creditors cannot claim those debts anymore.
Can I file bankruptcy chapter 7? It depends on a few things the new law requires. Mostly, people who are eligible to file a chapter 7 type of bankruptcy have below average income, according to their respective state. To be eligible for chapter 7, a person must pass the means test. This test will determine if a person has the means to pay or not for his debts. Having the means to pay simply speaks of a person who has the ability to pay for the debts he owes from his creditors. Having no means to pay your debts makes you eligible to file for chapter 7 type of bankruptcy because this speaks of a person who will go through undue hardships if forced to pay for his or her debts.
Can I file bankruptcy chapter 7 if I have an above average income? If you think you have an income that is above average and you foresee that you will fail the means test, then I suggest you wait for a while if you feel your income will drop down to below average. Timing is everything in filing for bankruptcy chapter 7. Use it.
There are ways you can file chapter 7 after you become eligible. If you want the easy way, simply hire a full time lawyer who will deal with your papers, represent you in court and give you legal advice. This, of course, is an expensive way to file. If you want a cheap way to file bankruptcy, then you can do all the work by yourself. But this can be a lot of work for you and the risk of you making mistakes on your papers can lead you to lose more assets.
To avoid mistakes, large expenses and a lot of work, I suggest you hire a petition preparer or a bankruptcy lawyer to prepare your papers and legal documents. You will only pay their flat fee, after which, you can do the rest of the filing. For more support on how to file bankruptcy, visit the link below.
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