Sometimes, debts accumulated by an individual are so high that the only way to repay the debt and make a fresh financial start is to file for bankruptcy. Those debtors who have no or negligible income can file for liquidation bankruptcy under Chapter 7 of the Bankruptcy Code. However, the eligibility to file for Chapter 7 bankruptcy is only confirmed when a debtor has met certain conditions. Residents of Fort Lauderdale and the nearby areas in South Florida who can relate to these challenges may wish to continue reading.
According to bankruptcy laws, an individual, a partnership, a business or a corporation can file for Chapter 7 bankruptcy. The most important condition that a debtor from one of these categories needs to meet to be eligible for a Chapter 7 bankruptcy filing pertains to income. As incomes can vary a great deal, both from state to state and person to person, the law requires that a “means test” be conducted in order to make sure that the Chapter 7 filing is not an abuse of the provision. It is only after the courts are sure that a filing is not abusive in nature do they allow the debtor to proceed with Chapter 7 bankruptcy.
In addition to the means test, there are a couple of other conditions that a debtor needs to fulfil before a successful Chapter 7 bankruptcy filing. First, the debtor seeking relief under Chapter 7 must not have had a bankruptcy filing, under any chapter, rejected in the preceding 180 days. And second, the Chapter 7 filing will only be permitted if the debtor can prove that adequate debt counseling was sought and received, either individually or in a group, in the 180 days preceding the filing, with certain exceptions.
As many readers may agree, the information provided in this blog post is fairly complicated and it will not be fair to blame someone for their lack of understanding. After all, bankruptcy is a complicated area of law and even the most experienced of people may need help in navigating. Therefore, owing to these challenges, people planning to file for Chapter 7 bankruptcy may choose to seek professional guidance.