As is usually the case, some individuals
may need lawyers for a highly specific
function due to their training and
experience. These legal professionals will know more about
their field or a more general branch of the law than clients would anticipate.
Such is the case with those facing bankruptcy court.
A Chapter 7 bankruptcy attorney is expected to be
proficient in all aspects of bankruptcy law. As such, he or she might be able to help petitioners avoid the
liquidation of their assets. Of course, a Chapter 7 lawyer is a
professional and would gladly accept remuneration in exchange for his or her
legal know-how. Just the same, a Chapter 7 bankruptcy attorney is, at
least theoretically, a servant of the public interest and may yet stand to gain
something from a paid consultation.
there are alternatives to Chapter 7 bankruptcy, and a Chapter 7
lawyer can advise an applicant on his or her best course of action. For
example, analysis of a person’s claim may reveal that
more appropriate route to take. is a
Once proceedings in bankruptcy court begin,
a Chapter 7 lawyer can also be an advocate for their clients,
especially regarding exempt properties that are aggressively pursued by
creditors. Certain assets more or less owned by petitioners, notably benefits like
Social Security and investments, may not be touched by collectors in the event
of wholesale liquidation. In fact, as recently as 2005, the Supreme Court
weighed in on the subject, stating in their majority ruling in Rousey v.
Jacoway that the contents of Individual Retirement Accounts (IRAs) are
off-limits when assets are reclaimed.
As proceedings become more adversarial,
a Chapter 7 bankruptcy attorney will be an invaluable defender and
supporter. Over the years, bankruptcy courts in the United States have gotten
much more apt to prosecuting perceived cases of abuse of bankruptcy law. If a
defendant is found to have failed the “means test” regarding their
viability for Chapter 7 bankruptcy, a Chapter 7 lawyer can lead the
way in rebutting this charge, pointing out reasons by which income or expenses
should be recalculated to reflect a more accurate depiction of the individual’s
What is Chapter 7 Bankruptcy?
1. Chapter 7 Bankruptcy is a financial program that individuals or businesses enter into when facing mounting debts or economic hardships.
2. Chapter 7 Bankruptcy is a fundamental aspect of the Title 11 of the United States Bankruptcy Code. The specific program, according to the Bankruptcy laws of the United States, governs the process of liquidation.
3. When an individual or business files for Chapter 7 bankruptcy, they will go through a liquidation process (selling their assets for cash) to help pay off their accrued debts. The process, although undesirable, is an effective way to clear off debts and, in essence, obtain a “fresh start.”
4. Chapter 7 Bankruptcy is a unique and popular form of bankruptcy in which a debtor individual or business who faces insurmountable debts liquidates their assets. The creditors, in line with their financial standing, then collect the proceeds of the liquidation process. Following the liquidation process, the majority of the debts are discharged, offering a fresh start to the individual or entity filing for Chapter 7 Bankruptcy.
Legal Process for Filing for Chapter 7 Bankruptcy
1. To initiate the Chapter 7 process, the individual or entity in question must file a number of documents and papers with their local Bankruptcy Court.
2. In order to receive a valid standing, the individual or entity must demonstrate the inability to file for reorganization or a repayment plan. Chapter 7 Bankruptcy filing does not offer the debtor the ability to pay off their debts through incremental payments, but rather, a liquidation process where the debtor’s assets are held against their debts.
3. As a result of the liquidation process attached to Chapter 7 Bankruptcy, the individual or entity must provide to the court a comprehensive list of all assets suitable for liquidation.
4. Upon receiving the list of assets, the court will review the information and determine if the debtor’s liquidated assets are substantial enough to fulfill their debt obligations.
5. After approval, the filing party must schedule a meeting with their creditors to discuss the assets that will be awarded to them. During this meeting, creditors may agree to take partial payments or may demand the full satisfaction of the debts owed to them.
6. Furthermore, a review of all the debts obtained will be reviewed. If the court finds that the debts were fraudulently obtained or were attached to such items as student loans, the filing party may be relieved of their obligation.
7. A lengthy procedure (typically 4-6 months) is required to initiate and subsequently complete a Chapter 7 filing.
Legal Aid Associated with Chapter 7 Bankruptcies
1. As a result of the program’s importance and the various laws which regulate the filing of a Chapter 7 Bankruptcy, it is strongly suggested that an individual engage the services of a bankruptcy attorney or legal professional to facilitate their claim.
2. Bankruptcy attorneys will deal with the local court systems and streamline the process of liquidation. A bankruptcy attorney (varies on a case by case basis) will also facilitate the delivery process of the liquidated assets to the respective creditors.
In filing for Chapter 7 bankruptcy, the
“where” aspect of the petition is definitely not to be overlooked.
Applicant parties must submit formal requests to the bankruptcy court with jurisdiction. However, before even concerning oneself with how to file
for Chapter 7 bankruptcy, a person contemplating such measures should see that
The means test may be a critical determinant
to see if individual debtors and insolvent corporations may legally petition
for Chapter 7 bankruptcy. Especially with regard
to the former, if one’s monthly income over the past five years exceeds the
median salary of the working population in the United States and/or regularly
adjusted dollar amounts (currently at a rate slightly over $10,000), they may
be charged with an abusive petition. Imaginably, such an accusation is by no
means a light matter. Therefore, prior to filing for
Chapter 7 bankruptcy, prospective petitioners are advised to consult with a
credit counselor as well as a bankruptcy attorney.
Another logistical point of concern
with how to file for Chapter 7 bankruptcy is how to prepare for the
inevitable creditors’ meeting mediated by the trustee.
When people or businesses apply for Chapter
7 bankruptcy, unless their claim is an attempt at an abuse of the system,
it is something of a last resort for them. Especially with regard to
liquidation of assets, Chapter 7 bankruptcies involve loss in a very
tangible sense, as those who file for this course of action must live with the
decision to permanently dispose of many of their possessions,
which will have an impact on them both physically and emotionally.
It should be noted that Chapter 7 bankruptcy
is different from Chapter 13 bankruptcy per
sé. Chapter 7 bankruptcy generally does not allow for applicants to keep their
property the way Chapter 13 bankruptcy does, unless those assets are
specifically exempt from being reclaimed.
Though this may not be a pressing concern of
owners and contributors with a financial stake in a company,
business-oriented Chapter 7 bankruptcies may also be a means of selling
the rights to the organization without getting rid of everyone involved.
Specifically, those employed by a corporation filing for bankruptcy may not
necessarily lose their jobs, as the buyers, following liquidation, may choose
to incorporate both the infrastructure of the old entity and the employees who
helped maintain it. Under such a scenario, the luckiest of these workers would
become new agents of the larger association that absorbed them.
As liquidation of a person’s assets or
dissolution of a whole company is a legal process that involves a formal
petition, there are without a doubt Chapter 7 bankruptcy forms to be
filled out in the act of applying. Of course, the request itself that must be
received by the courts in instances of voluntary liquidation/dissolution is one
of these Chapter 7 forms. In fact, there will be
several Chapter 7 bankruptcy forms that are required to be completed
before the process can begin and applicants can receive relief from the
pressures of debt.
In their specificity, these Chapter 7
forms cover a number of different administrative functions in readying all
parties for bankruptcy court. The following is a list of some Chapter 7
bankruptcy forms that will be needed from start to finish:
As noted, there is the matter of the petition
in itself. Applicants must file petitions for declaring Chapter 7 bankruptcy
with the bankruptcy court. Chapter 7 bankruptcy is an option for business
owners and private individuals alike. In the case of the latter, some might
request a liquidation of their assets even when the primary source of their expenses are consumer-based.
Under these circumstances, additional Chapter 7 bankruptcy forms will
likely have to be provided by those contemplating this course of action.
Among the Chapter 7 forms to be asked of
petitioning parties are evidence of any recent payments received from
employers, accounts of loans and other financial arrangements reached with
educational and financial institutions, and a record of credit counseling in
which repayment of debts was discussed.
Beyond the aforementioned Chapter 7
bankruptcy forms associated with the overall Official Bankruptcy Form Petition, there are other special considerations that must
not be overlooked. While this much may largely not apply to younger applicants,
a printed schedule of all exempt properties