Chapter 7 Bankruptcy is one of the types of bankruptcy that is available to individuals. The below information regarding Chapter 7 Bankruptcy for individuals is part of the notice that is required by 11 U.S.C. U.S.C. § 342(b). Debt relief attorneys, such as bankruptcy attorney Joseph Battaglia, are required to provide this information to individuals who are seeking information regarding bankruptcy relief, and whose debts are primarily consumer debts. If you are such an individual, please read on for more information.
Notice Regarding Chapter 7 Required by 11 U.S.C. § 342(b)
Chapter 7 is for individuals who have financial difficulty preventing them from paying their debts and who are willing to allow their non-exempt property to be used to pay their creditors. The primary purpose of filing under chapter 7 is to have your debts discharged. The bankruptcy discharge relieves you after bankruptcy from having to pay many of your pre-bankruptcy debts. Exceptions exist for particular debts, and liens on property may still be enforced after discharge.For example, a creditor may have the right to foreclose a home mortgage or repossess an automobile. However, if the court finds that you have committed certain kinds of improper conduct described in the Bankruptcy Code, the court may deny your discharge. You should know that even if you file chapter 7 and you receive a discharge, some debts are not discharged under the law. Therefore, you may still be responsible to pay:
- most taxes;
- most student loans;
- domestic support and property settlement obligations;
- most fines, penalties, forfeitures, and criminal restitution obligations; and
- certain debts that are not listed in your bankruptcy papers.
You may also be required to pay debts arising from:
- fraud or theft;
- fraud or defalcation while acting in breach of fiduciary capacity;
- intentional injuries that you inflicted; and
- death or personal injury caused by operating a motor vehicle, vessel, or aircraft while intoxicated from alcohol or drugs.
If your debts are primarily consumer debts, the court can dismiss your chapter 7 case if it finds that you have enough income to repay creditors a certain amount. You must file Chapter 7 Statement of Your Current Monthly Income (Official Form 122A–1) if you are an individual filing for bankruptcy under chapter 7. This form will determine your current monthly income and compare whether your income is more than the median income that applies in your state.
If your income is not above the median for your state, you will not have to complete the other chapter 7 form, the Chapter 7 Means Test Calculation (Official Form 122A–2).
If your income is above the median for your state, you must file a second form —the Chapter 7 Means Test Calculation (Official Form 122A–2). The calculations on the form—sometimes called the Means Test—deduct from your income living expenses and payments on certain debts to determine any amount available to pay unsecured creditors.
If your income is more than the median income for your state of residence and family size, depending on the results of the Means Test, the U.S. trustee, bankruptcy administrator, or creditors can file a motion to dismiss your case under § 707(b) of the Bankruptcy Code. If a motion is filed, the court will decide if your case should be dismissed. To avoid dismissal, you may choose to proceed under another chapter of the Bankruptcy Code.
If you are an individual filing for chapter 7 bankruptcy, the trustee may sell your property to pay your debts, subject to your right to exempt the property or a portion of the proceeds from the sale of the property. The property, and the proceeds from property that your bankruptcy trustee sells or liquidates that you are entitled to, is called exempt property. Exemptions may enable you to keep your home, a car, clothing, and household items or to receive some of the proceeds if the property is sold.
Exemptions are not automatic.To exempt property, you must list it on Schedule C: The Property You Claim as Exempt (Official Form 106C). If you do not list the property, the trustee may sell it and pay all of the proceeds to your creditors.
– end of notice required by 11 U.S.C. § 342(b) –
Chapter 7 Bankruptcy is Complex
Well, let’s be honest, any chapter of bankruptcy is complex. However, with the grave consequences that could result form an improper chapter 7 filing (as opposed to improperly filing under another chapter, such as Chapter 13), it is highly recommended to have competent legal counsel representing and guiding you through the process. Bradenton bankruptcy attorney Joseph Battaglia has filed hundreds of chapter 7 cases on behalf of individuals like you. Contact him today to schedule a consultation. There is no cost or obligation for bankruptcy consultations.