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Bankruptcy, Debts and Valuations

Costs in Money and Time: Bankruptcy Debt

With no income and means to repay, Chapter 7 remains the only choice for debtors struggling with payments. Chapter 7, which is also known as liquidation bankruptcy, cancels the debt and resorts to selling of assets for paying off creditors. This way, some loss of the creditors is recovered and bankruptcy debt is taken care off.[br]

Costs in Money and Time: Bankruptcy Debt

Clearing bankruptcy debt takes time as well as money, especially when it comes to Chapter 7. The filing process alone charges $299 along with other administrative charges, and requires a trip to the courthouse.

The process also requires debtors to complete a credit counseling session with a consultant approved by the US Trustee. Debtors can check the list of approved consultants by visiting www.usdoj.gov/ust and clicking on the ‘Credit Counseling’ section.

Filing Process: Bankruptcy Debt

The filing process starts with filing the petition along with other forms at a nearby bankruptcy court. The form requires the following details:

·        Property

·        Current income

·        Monthly living expenses

·        Debts

·        Exempt property: Under Chapter 7, most US states let debtors keep their equity in home, clothing, cars and unspent social security.

·        Property owned in the last two years

·        Spent money during the last two years

·        Sold or given away property in the last two years

Chapter 7 Eligibility: Bankruptcy Debt[br]

Though Chapter 7 is the end of many problems, its eligibility is kept extremely strict. There is a strong ‘means test’ that evaluates the overage of debts over income. If the debtor is found capable of repaying, the bankruptcy file can be rejected or converted into a Chapter 13 bankruptcy, which works on a repayment plan.

Also, debtors who have received a discharge in the last 6 to 8 years are not eligible for filing their second bankruptcy under Chapter 7. Other conditions that make a debtor ineligible for Chapter 7 are:

·        Debtors violated court orders

·        As per a ruling, the application was found out to be fraud or abusing the bankruptcy process

Debtors should know that the government has become proactive at evaluating Chapter 7 request, as many debtors have been found to abuse the protection it offers. Therefore, the applications must remain authentic.