I am often asked as a Plainfield bankruptcy attorney, what is Chapter 7 bankruptcy? Chapter 7 bankruptcy is a fresh start under the United States Bankruptcy Code. Chapter 7 allows an individual to file a bankruptcy case every 8 years to eliminate unsecured debt if that person does not have the ability to repay the debt over time. The ability to repay the debt over time is known as the means test. The means test is a mathematical calculation based upon your income, the state you live in, and your household size. If the court determines that you have the ability to pay back a portion of your debt over time, then you may be required to file Chapter 13 bankruptcy instead of a Chapter 7 bankruptcy.
The first step in considering whether to file a Chapter 7 bankruptcy case is to meet with a competent, skilled, seasoned Chapter 7 bankruptcy attorney. That Chapter 7 bankruptcy attorney is going to sit down with you and interview you. The interview is going to over your assets, your liabilities, your income, your expenses, and your statement of financial affairs. During this interview, the attorney will point out any debts that would not be eliminated in a Chapter 7 bankruptcy, such as student loans, recent taxes, parking tickets, child support, alimony, and debts incurred by some type of fraud. During the interview, the local bankruptcy lawyer is going to basically determine whether or not Chapter 7 is going to be in your best interest. If you are someone who has a ton of unsecured debt, such as credit card bills and medical bills, and you do not have a significant amount of equity in any type of property, then you are likely a good candidate for a Chapter 7 bankruptcy case. Chapter 7 bankruptcy will allow you to keep whatever you have in exempt property, such as real estate and vehicles and retirement accounts and bank accounts, and still eliminate your unsecured debt, such as medical bills and credit cards.
When you file bankruptcy under Chapter 7, it involves the filing of a bankruptcy petition. This petition is prepared by your bankruptcy attorney, and you are required to sign it under all penalties of perjury. There are about 12 different places that you need to sign this petition. Basically, every few pages, the federal government wants to know is the information true and accurate to the best of your knowledge, and they ask that you sign. Once the document is signed, it is ready for filing. But before your case can be filed, there are some Chapter 7 prerequisites that must be completed.