In Chapter 7 Bankruptcy

The debtor is required to surrender assets to pay debts. Any remaining debt after this process is completed will result in the discharge of that debt. If and when a bankruptcy is discharged, the debts owed to creditors which had debt included in the bankruptcy is discharged. This type of debt is no longer to be paid by the debtor to the company.

Generally, some items do not fit into chapter 7 bankruptcy or may be exempt from the process.

• In some states, individuals are able to keep one vehicle.
• In many states, a debt that is current and being paid on time can be exempt from the discharge of the debt. For example, if a home mortgage loan is being paid on time and is not late, it does not have to be included in the bankruptcy. The lender of this loan must agree to this process, but generally do so since it keeps the loan being paid. Vehicles that have loans on them may also go through this process.
• Some types of debt are unable to be discharged at all. This includes any type of spousal or child support that is owed or coming in the future. Student loans are also required to be paid. These cannot be discharged. Additionally, most types of government taxes are also unable to be discharged.
• Clothing, personal items and other items that have low monetary value may not need to be seized to pay the debts of a debtor.

Each state has the ability to set their own requirements for bankruptcy. You can find out what these are by talking to your attorney.

In 2005, the Bankruptcy Abuse Prevention and Consumer Protection Act was enacted. This was a large amendment to the Bankruptcy Code and has substantially changed the process for bankruptcy within the country. One of the most specific changes to the bankruptcy law from this specific amendment includes the addition of a means test. This test is designed to determine if the individual has the ability to make payment on the debt or not. This means test often allows people to qualify for Chapter 7 bankruptcy if they do not meet specific state standards for income. If you fail the means test, you can still submit a bankruptcy claim but it must go through Chapter 13 instead.

In addition to this, the new bankruptcy laws also put in place specific requirements for credit counseling. Specific, chosen credit counseling agencies have been designed to provide assistance of individuals to try and work out a repayment schedule with lenders. The individual also must undergo some level of personal financial management. This process allows for anyone who needs to file bankruptcy to learn to understand better how to manage money appropriately.

The goal of the new law was to specifically limit the amount of times people can file bankruptcy. Since many people who do file are able to obtain credit again, and the process starts all over, the need to put in place measures to stop this process was necessary, according to Congress.

Individuals who are in need of filing bankruptcy still have the means to do so. The need for them is to determine the right type of filing. In addition, it is nearly impossible to go through bankruptcy successfully without an attorney. Since an attorney needs to monitor very specific timelines and the specific requirements of this law, if you are considering filing bankruptcy you should invest in a quality attorney to help you through the process. Bankruptcy law is very specific about these requirements.