If you have been unable to pay off your debts and do not have a windfall coming anytime soon, you may be considering filing for bankruptcy. The two main alternatives that individuals in Kentucky have to decide between are chapter 7 and chapter 13. Here we will examine chapter 7 bankruptcy in order to provide you with a basic understanding of what it entails.
What happens in chapter 7
The United States Courts provide a detailed explanation of what is involved in the different types of bankruptcies. A chapter 7 bankruptcy is where you can expect to have many of your assets liquidated and used to pay off your debts. When filing under chapter 7, certain assets can be specified as being exempt from this liquidation process.
Chapter 7 bankruptcy also places a stay on all debt collection efforts against you, allowing you time to complete all of the bankruptcy proceedings without having to deal with lawsuits and wage garnishments. The liquidation of your assets and administration of your case will be undertaken by a state-appointed impartial trustee, who will meet with you and your creditors.
Eligibility under chapter 7
You can only file under chapter 7 if you have received credit counseling within the 180 days prior. Filing for chapter 7 bankruptcy requires that you meet a certain income threshold, which is determined in a process known as the means test. It is also helpful to know that if your income is below 150% of the poverty level, you may be able to have the costs of filing for bankruptcy waived.
This is an informational article that is not to be used as legal advice.