Qualifying for Relief Under Chapter 7 of Bankruptcy Code

Happy June 2nd... Let's continue with learning about Chapter 7 of the Bankruptcy Code. The topic of the day... Who is eligible to file for Chapter 7 ? According to the US Courts website... you can be an individual, a partnership, or a corporation or other business entity. 11 U.S.C. §§ 101(41), 109(b). So who is not eligible ? An individual cannot file under chapter 7 or any other chapter, however, if during the preceding 180 days a prior bankruptcy petition was dismissed due to the debtor's willful failure to appear before the court or comply with orders of the court, or the debtor voluntarily dismissed the previous case after creditors sought relief from the bankruptcy court to recover property upon which they hold liens. 11 U.S.C. §§ 109(g), 362(d) and (e). In addition, no individual may be a debtor under chapter 7 or any chapter of the Bankruptcy Code unless he or she has, within 180 days before filing, received credit counseling from an approved credit counseling agency either in an individual or group briefing. 11 U.S.C. §§ 109, 111. There are exceptions in emergency situations or where the U.S. trustee (or bankruptcy administrator) has determined that there are insufficient approved agencies to provide the required counseling. If a debt management plan is developed during required credit counseling, it must be filed with the court. This definition of eligibility is definitely written in "lawyer-speak"... so as part of Foster Law Office's Marketing Department, let's break it down... One of the primary purposes of bankruptcy is to discharge certain debts to give an honest individual debtor a "fresh start." Discharge is just a fancy word for "getting rid of"... So most individuals file for Chapter 7 bankruptcy to "get rid of" debt. Once, a debt has been "discharged" the individual is no longer liable. BUT (here is the other side)the right to discharge is NOT guaranteed - some debts are not discharged and this will not extinguish a lien on property. This topic is a complex one for sure. It is always best to consult with a licensed bankruptcy attorney as each asset, individual and situation is different. The process is quite complex and deadlines are crucial. Next topic we will tackle - how does filing for Chapter 7 work?? If you are considering filing for protection under Chapter 7 of the US Bankruptcy Code - contact Foster Law Offices to schedule a free consultation.

Posted in Chapter 7 Bankruptcy Eligibility , Foster Law Offices