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Chapter 7 bankruptcy is often the bankruptcy of choice for many individuals and families. However, due to the passage and implementation of the Means Test in 2005 chapter 7 is not available to all debtors. There are now stringent income requirements imposed as set forth by the IRS. The Means Test and the income requirements imposed as a result is often the deciding factor in qualifying an individual or family for chapter 7 bankruptcy. Legal guidance and consultation is often necessary to determine if the income of the specific client passes the Mean Test and the determination can be complicated depending the on the specific income and expenses applicable in each case. However, even after the passage and implementation of the Means Test many individuals and families can still qualify for chapter 7 and in fact more bankruptcies are filed under chapter 7 each year than under any other chapter of bankruptcy.

Chapter 7 is often referred to as "liquidation" despite the reality that most chapter 7 bankruptcy debtors retain most if not all of their assets at the conclusion of the case and discharge of all of their debt. Under applicable state and federal law, each debtor is permitted to keep certain property that is claimed as exempt utilizing the state and federal exemption laws. Properly exempting the debtor's assets is often the most difficult task for the debtor's bankruptcy attorney. Debtors are permitted under law to file bankruptcy pro se but often the applicability of the exemption statutes and governing case law require legal knowledge beyond that possessed by the individual or family and improperly exempting assets can result in the loss of property and additional expense.

A chapter 7 bankruptcy does not require a repayment plan and this is often the reason it is preferred over other chapters of bankruptcy and this type of bankruptcy is often completed in roughly 90-100 days (as compared to chapter 13 which requires a repayment plan for 3-5 years). Most if not all of the debt of the person filing should be dischargeable subject to the applicability of certain provisions that make specific debts non-dischargeable such as student loan debt and certain debts owed to the IRS for delinquent income taxes. Transfers of assets to family members or business partners and even the repayment of debt to creditors prior to bankruptcy can result in a denial of a discharge. Formal legal guidance and consultation concerning debts that are non-dischargeable and possible transactions and payments that could impair the relief available is often necessary and a full discussion of all applicable bankruptcy provisions should be sought from a bankruptcy attorney.


In many cases a chapter 7 bankruptcy may be able to
  • Stop Foreclosure Proceedings and Lawsuits filed by Credit Card Companies
  • Eliminate Mortgage and Home Equity Line Debt
  • Stop Repossessions
  • Stop or Prevent Wage Garnishments
  • Eliminate Medical Debt
  • Eliminate Credit Card Debt and other Unsecured Debt
  • Protect Exempt Assets and Wages
  • Stop Creditor Calls and Harassment
Contact Tiller & Rivera Law P.A., PLLC., for a FREE CONSULTATION.
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