What is Chapter 7 Bankruptcy?
Chapter 7 is known as a liquidation bankruptcy and is used to get rid of the debt that a debtor cannot afford. Under this bankruptcy, your income and expenses are evaluated to ensure that you don’t have monthly income left over that you could use to pay your creditors back.
You have to qualify for Chapter 7 and must meet the disposable income requirements and the means test per the IRS guidelines and under 11 USC section 101(10)A your last 6 months of pay/income will be evaluated to make sure you qualify for this benefit.
In South Carolina for example, the median income is $3887 monthly for a household of one. For a household of two it is $5036. These figures change periodically so it’s always best to speak with someone before trying to figure out on your own if you qualify for relief under this chapter of the Bankruptcy Code. Additionally, the assets that you have in your bankruptcy will be evaluated and sold, if necessary, to pay back your creditors. In most bankruptcy cases, a no asset report is filed and the trustee does not sell your property.
The process for a Chapter 7 bankruptcy is about four (4) to six (6) months long. Once you file your bankruptcy, you will have a Meeting of Creditors about thirty (30) days after the date that your petition was filed. This is a hearing that debtors will have to attend. Once you finish your Meeting of Creditors, you will need to wait for your bankruptcy to be discharged. Once you receive your discharge, you need to send the notice to the credit bureaus in order to clean up your credit report.