Filing a Chapter 7 bankruptcy can be very confusing, especially with the new laws that have gone into effect. This is an important reason for hiring a bankruptcy attorney if this is the option being considered. The laws have changed regarding who qualifies to choose Chapter 7 bankruptcy. There are several legal restraints that have been added including the amount of expenses and earnings. Often people do not qualify for Chapter 7 and must file Chapter 13 bankruptcy.
A bankruptcy attorney can clarify the new laws and restrictions that must be met. In addition, there are residency requirements and financial counseling as well as rules about cash loans and purchasing expensive items in the past 60 days. For the average consumer, this may be a bit overwhelming. This is why an attorney can be extremely helpful.
Qualifications required will include determining how much is spent on living expenses and food. Typical amounts spent on both cannot be more than $1100 per month. If they are more, Chapter 7 bankruptcy cannot be filed. A "means test" is also used to figure earnings minus food and housing.
If the qualifications are met, a trustee is appointed and all non-exempt property is sold. What is considered non-exempt property and exempt property varies from state to state. A bankruptcy attorney will know what is exempt in the state in which they practice.
Homes and property are protected in some states and are not allowed to be liquidated to satisfy debt. This is due to the U.S. Government Bankruptcy code that says a debtor can retain some or all of their property. There are 19 classes of debt that can be discharged when using Chapter 7 bankruptcy. Some of these include credit cards, personal loans, leases, repossession deficiencies, negligence claims, medical bills, judgments and tax penalties that are more than 3 years old.
Since Chapter 7 bankruptcy discharges or renders a debt unenforceable against the person owing the debt, many people were choosing to file this type of bankruptcy. This is why the new laws were put into effect. There were a large number of people who had incurred debt by taking on more and more new credit and using Chapter 7 to eliminate their debt. This is another reason that resident requirements were added to the changes. Today, the law requires the debtor to be a resident of the state in which he is filing for at least two years.
Although there are some people who do not think they need a bankruptcy attorney, this may not always be true. When filing a Chapter 7 bankruptcy, there are many forms that must be filled out and submitted. Ensuring that they are filled out properly is one task the attorney can perform. In addition, there are deadlines to be met and if you are unable to make a court date, the attorney can appear on your behalf. A bankruptcy attorney can also enforce stays to keep bill collectors from trying to collect after the bankruptcy has been filed.
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