Chapter 7 Liquidation:
In a Chapter 7 Bankruptcy also known as liquidation, most of the debtor’s dischargeable debts are forgiven and the debtor is allowed a fresh start. The debtor is allowed to keep certain exempt property depending on the state they live in. The value of property that can be claimed as exempt varies from state to state. Assets that are not protected under an exemption are sold by the interim trustee to repay creditors. Many types of unsecured debt are legally discharged by the bankruptcy proceeding, however there are various types of debt that are not discharged in a Chapter 7. Some exceptions to discharge include child support, income taxes less than 3 years old and property taxes.
When a person decides to file for bankruptcy the advisable first step is to see an attorney. Among the requirements for qualification is whether the person falls within the means test. The attorney will require for the debtor to bring pay stubs and provide a list of their expenses. In our office for example, once income is determined, we will ask the client to bring additional documents including tax returns and their bills. The Bankruptcy court requires that the debtor takes two classes one before the petition is filed which is called Credit Counseling and one after which is called Financial Management. The classes can be done online and a certificated would be send to the debtor or his attorney via e-mail. After the petition is file a hearing will be schedule. In that hearing the debtor will see a bankruptcy trustee who will ask question regarding their application. If there are no issues the debtor will get a bankruptcy discharge.
For more information please contact our office at 201-880-5563 or visit us at www.ruizdoolanlaw.com for a consultation.
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