Almost all people who decide they need to file bankruptcy will first look at chapter 7 type of bankruptcy. This is because out of all the types of bankruptcy, chapter 7 seems to be the best in eliminating those pesky debts. After all, it would be a great relief to make all those debts disappear at the same time. But before you indulge in filing for chapter 7 bankruptcy, remember that your properties will be sold and the generated proceeds will be distributed to your creditors if you have equity.
Chapter 7 is a type of bankruptcy that allows an individual to set a legal action to discharge all of his debts in exchange for his properties to be liquidated. Not all properties are sold; there are certain types of properties stated in the bankruptcy law that allows a person to keep some of his properties. These properties that can be kept are called exempt properties. Before you can file bankruptcy chapter 7, there will be a meeting of creditors which you will need to attend and they will question your ability to pay.
To be able to qualify for a chapter 7 type of bankruptcy, you need to take the means test. This test will provide the information needed to prove that you have no other way out of your debt. You can easily file for chapter 7 if your income is below average because you will have a greater chances in passing the means test. When you file bankruptcy chapter 7, it will cost less than chapter 13 that requires you to propose a repayment plan to your creditors. This repayment plans are usually provided by a credit counseling agencies which you need to pay them for their services.
Currently, the changes in the bankruptcy law under Bankruptcy Abuse Prevention and Consumer Protection Act or BAPCPA last October 2005 have made it even harder for people to file bankruptcy chapter 7. This is because people tend to take advantage of the bankruptcy system. Before the changes in the bankruptcy law last 2005, people could easily choose between chapter 7 or chapter 13 bankruptcies. Many file, for the relief it provides, choose chapter 7 even though they can still pay their creditors using a chapter 13 type of bankruptcy.
In order to save time and money before you intend to file for a chapter 7 type of bankruptcy, take a look at your monthly income and see if your income is categorized below the stated average income of your state. If your income is below average, this will make your case in the court stronger.
With the new law making chapter 7 more difficult to file, it also made hiring lawyers and attorneys for this type of bankruptcy expensive for people who do not have enough money to hire such lawyers and attorneys. They can find cheaper ways to file their bankruptcy. One way is to file bankruptcy yourself. That means you will have to prepare all your documents, fill out the forms, and file them in court.
This needs a lot of self study and takes tons of your time. I suggest hiring a petition preparer or a bankruptcy lawyer to do prepare your documents and then do the rest by yourself. which is the best way to file bankruptcy. This way it is cheaper and you just do a little work yourself. For more information on how to file bankruptcy visit the website below.
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