Chapter 7 Bankruptcy Information That You Have to Know

Filing for Chapter 7 bankruptcy used to be an easy task some years ago. Not any more, with the Federal Government introducing some sweeping changes to the laws governing filings for Chapter 7. Obviously, the government realized that a lot of people went about filing for Chapter 7 even in spite of them being in a position to repay their creditors. Below you can read about chapter 7 bankruptcy information.

Bankruptcy test compulsory for all individuals

Under the new laws, anyone wishing to file for Chapter 7 would need to undergo a bankruptcy test. In this test, their gross annual income would be measured against the median income of the state they live in. If their gross annual income comes below the benchmark of the median income of the state, the individual can file for Chapter 7 bankruptcy.

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A critical element of Chapter 7 bankruptcy information here is what happens to the financial standings of the debtor. First things, all his assets are frozen by the government. In other words, these assets are liquidated, primarily with the objective of paying back the creditor their dues.

The important thing to note here is - Many times, the liquidity amount coming out from freezing of assets is just not enough to payoff the creditors. In such a scenario, the creditors cannot do anything but accept the court's verdict. Agreed that they go in a loss here, but they can't do anything if the court decides to approve the bankruptcy claim of the individual.

Debt counseling services

Even before the individual decides to file for Chapter 7, he should go in for a Debt counseling service. Please note that this is important because debt counseling helps an individual rearrange his debts. If the creditors do agree to the terms and conditions of the payment, the individual could avoid filing for Chapter 7 bankruptcy.

Chapter 7 is notorious for its ramifications on the financial standings of individuals. It is believed that individuals may not get fresh credit from banks and other institutions for a time of two years from the filing date.

Anyone who desires to file for Chapter 7 should do well to pick up these important bits of Chapter 7 bankruptcy information. It is not mandatory, but individuals would be well served if they hire the services of an experienced attorney, who could help them tide through these crisis times.

Chapter 7 bankruptcy indeed is a difficult chapter in an individual's life, and any help forthcoming here will aid the individual to come out of this faster.

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