Frequently Asked Questions
1. What is a chapter 7 bankruptcy case and how does it work?
A Chapter 7 bankruptcy case is a proceeding under federal law in which the debtor seeks relief under chapter 7 of the Bankruptcy Code. Chapter 7 is that part (or chapter) of the Bankruptcy Code that deals with liquidation. The Bankruptcy Code is a federal law that deals with bankruptcy. A person who files a Chapter 7 case is called a debtor. In a Chapter 7 case, the debtor must turn his or her nonexempt property, if any exists, over to a trustee, who then converts the property to cash and pays the debtor's creditors. In return, the debtor receives a Chapter 7 discharge, if he or she pays the filing fee, is eligible for the discharge, and obeys the orders and rules of the bankruptcy court.
2. What is a Chapter 7 discharge?
It is a court order releasing a debtor from all of his or her dischargeable debts and ordering the creditors not to attempt to collect them from the debtor. A debt that is discharged is a debt that the debtor is released from and does not have to pay.
3. How does a person obtain a chapter 7 discharge?
A Chapter 7 discharge is obtained by filing and maintaining a Chapter 7 bankruptcy case and being eligible for a Chapter 7 discharge. However, not all debts are discharged by a Chapter 7 discharge. Certain types of debts are by law not dischargeable under Chapter 7 and debts of this type will not be discharged even if the debtor receives a Chapter 7 discharge.
4. Who is permitted to file and maintain a chapter 7 case?
Any person who resides in, does business in, or has property in the United States is permitted to file a Chapter 7 bankruptcy case except a person who has intentionally dismissed a prior bankruptcy case within the last 180 days. To be permitted to maintain a Chapter 7 bankruptcy case a person must qualify for Chapter 7 relief under a process called means testing.
5. What is means testing?
Means testing is a method of determining a person's eligibility to maintain a Chapter 7 case. Under means testing, a person whose current monthly income from all sources multiplied by 12 exceeds the median annual income, as reported by the U.S. Census Bureau, for the person's state and family size, must show that he or she is not able to pay a minimum of $109.58 per month for 60 months to his or her unsecured creditors from his or her disposable monthly income. Only upon this showing will the person be eligible to maintain a Chapter 7 case. Disposable monthly income is a person's current monthly income from all sources less the person's permitted current monthly expenses. The Chapter 7 case of a person whose disposable monthly income is such that he or she is deemed to be able to pay $109.58 per month or more to unsecured creditors for 60 months will be dismissed or converted to Chapter 13 unless special circumstances exist.
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.
