- Chapter 7 is known as debt liquidation. In a Chapter 7 filing, the bankruptcy trustee collects your assets and property that are not protected by federal or state exemptions and sells them. With the money he collects from the sale of these items, he pays off all the debts he can. After this point, your liability to pay your creditors is eliminated, as are all of your dischargeable debts -- even the ones the trustee could not pay. Some debts are not dischargeable under Chapter 7.
- Any debtor is allowed by the Bankruptcy Code to file for Chapter 7 a second time. You cannot, however, receive a Chapter 7 discharge if fewer than eight years have passed since your first Chapter 7 case. Also, to be able to file again, you must meet the same requirements for a Chapter 7 filing you met the first time. These requirements include receiving credit counseling from an approved agency and passing the means test, which evaluates your income in comparison with your state's average income.
- You are also allowed to file for Chapter 7 after having filed for other chapters of bankruptcy. The time between these filings can vary depending on the chapter previously filed. If you filed for Chapter 11 (reorganization of debts), you must also wait eight years between filings. If, however, you filed for Chapter 12 (farmer or fisherman bankruptcy) or Chapter 13 (debt repayment), you must wait only six years between filings.
- If you filed for Chapter 7 before and you are planning to file again, you must consider the consequences of this second filing in your life. A Chapter 7 filing, as explained before, requires the trustee to sell your property and assets that are not protected under exemption laws. Filing a second time means that, again, the trustee will sell your property and assets. You must consider this effect on your life and think about whether the results are worth a second filing.
previous post
next post