Individuals who are unable to meet their debt obligations may be able to have their debts discharged through a liquidation bankruptcy. As the process implies, assets might be liquidated in an effort to raise money to pay off outstanding loan balances. Those who file for Chapter 7 protection may need to pass the means test as a requirement of obtaining such protection. This checks to see if a debtor’s income is lower than the median in his or her state.
Passing the test may not be required of those who have primarily tax, business or tort debts. It is not possible for a person who is part of an LLC or corporation to file for a consumer Chapter 7 bankruptcy. However, it may be possible to file bankruptcy in an effort to discharge business debts that an individual personally guaranteed. Sole proprietors can also file for a consumer Chapter 7 bankruptcy.
The law requires a person to wait eight years after a Chapter 7 case is discharged before he or she can do so again. Those who file for Chapter 13 bankruptcy must wait six years before they can file for a liquidation bankruptcy. These rules are put into place to prevent people from routinely accruing debts that they don’t plan on repaying.
Anyone who is thinking about filing for Chapter 7 bankruptcy may stand to gain from contacting a bankruptcy attorney. This may make it possible to learn more about how much it costs to file and how legal counsel is able to help a debtor. An attorney may be able to resolve any disputes between debtors and trustees or debtors and creditors that might arise. This may help ensure that a bankruptcy proceeding is closed in a timely manner.