Chapter 7 bankruptcy is one of the most common chapters that individuals, businesses, and families file under.
Chapter 7 bankruptcy is also known as the liquidation chapter in which the U.S. trustee appoints a chapter 7 trustee who ensures to check if the debtor is likely to have any assets under his/her name so that they could be liquidated and the funds could be used to pay off the creditors.
The bankruptcy process of chapter 7 takes less time compared to any other chapters in bankruptcy.
In chapter 7 the creditor would not be able to make the payments of the debts every month. This chapter helps the creditors to discharge unsecured loans such as payday loans, credit cards, and personal loans.
When it comes to companies, they would not be able to discharge the debts in chapter 7.
To file for chapter 7 bankruptcy, an individual or the family must go through what is called a “MEANS TEST.”
The means test looks at overall household income for your family size earned over the last six months and compares it to the median household income for family size in each county in the particular state.
If the individual or family’s income is below the median income, you have passed the MEANS TEST.
However, if the household income is higher than the median income, you might want to check with your attorney for other options. However, an organization is not subject to the MEANS TEST.
In chapter 7 the creditors may have to surrender the assets that they own. For example, if you have an investment in real estate that would be considered a non-exempt asset and the trustee would be selling that to pay off your debts.