Declaring Bankruptcy: Chapter 7
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If you are deep with debt and also have exhausted all the other possible options then filing for bankruptcy may perhaps be your only choice for financial salvation. Whether or not declaring bankruptcy is the best choice for you is dependent on several factors. These incorporate your age, the amount of your dependents, how big your financial troubles, what money you've saved for retirement, and the level of the non-dischargeable debt. These factors will all play into how your bankruptcy case is going to be handled.
When many people state they are declaring bankruptcy they frequently mean they are filing under Chapter 7 bankruptcy. Chapter 7 bankruptcies is what is known as a liquidation bankruptcy where a trustee is chosen to prepare, collect, then sell a person's nonexempt assets. After this is achieved the trustee will likely then distribute what is earned from the liquidation between the debtor's creditors. This is accomplished so that they can eliminate all the debt as possible.
These nonexempt assets include musical instruments, private collections (art, stamps, coins, etc.), family heirlooms, cash, savings accounts, bonds, certificates of deposits, secondary nonessential vehicles and homes, and also other nonessential items for life. Although certain items, like as musical instruments, could be filed under exempt assets when essential to a person's financials such as a professional musician.
As stated above there are certain things that are exempt from chapter 7 bankruptcy. These items are determined to be required for living. These items include tools of a trade or profession that are essential, certain household appliances, clothes up to and including certain value, jewelry approximately certain value, public benefits, welfare, social security, unemployment compensation, money from accidental injury settlements, pensions, and vehicles up to a certain value.
Whatever debt is not paid back is generally discharged. There are certain debts that can't be discharged though. These non-dischargeable debts include federal, state, and local taxes, child support and alimony, government imposed fines and penalties, most student loans, and debts not discharged from previous bankruptcy filings. Although sometimes student loans might be discharged but given that it is determined if paying them back may cause undue hardships on the debtor and their dependents.
In combination with these non-dischargeable debts there are a lot of others that relate to certain legal and illegal activities. These include debt from fraud, malicious acts, embezzlement, larceny, and debts from divorce settlements decreed by way of a court. Before all this takes place though there is a need for a "means test."
This test was added to bankruptcy code to ensure that people declaring bankruptcy under Chapter 7 bankruptcy are actually worthy of filing. This involves an extreme study of the debtor's income over the length of six months time. This is then compared to the income on a yearly basis. After this is accomplished the debtors earnings are compared to other median household incomes of similar social standings. This test is designed to check if one is eligible to Chapter 7 bankruptcy or if they belong to an alternative chapter for instance Chapter 13.
Article Source: Articlelogy.com
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