A chapter 7 bankruptcy forgives the debt of a person who doesn’t have the resources to pay that debt. Because it is a complicated legal procedure, it is a good idea for the debtor to hire a chapter 7 bankruptcy lawyer. The lawyer will confirm that the person is legally able to use chapter 7 to erase their debt. First, it must be at least 8 years since the person last filed for a chapter 7 bankruptcy or at least six years since the person used chapter 13 to declare bankruptcy. Second, the person must have made under the mean income for their state for at least six months. There are a few exceptions that might apply to each of these requirements.
Once the bankruptcy court receives the chapter 7 application, the judge appoints a trustee to oversee the process. He or she will call a hearing of the creditors and then arrange to sell off all of the debtor’s non-protected assets. Most debtors dread the thought of meeting all of the people they owe money in one room. In fact, most creditors don’t bother attending the meeting. If they do, they are required to be courteous and are limited in the things they can say. Most will only question the debtor on their current financial status. The chapter 7 bankruptcy lawyer will also be there to help answer any questions. Federal and state law governs what assets are available for sale to pay off a person’s debt. The debtor’s lawyer will make sure that all protected assets are not sold. In most states, this includes a person’s home, car, and any equipment they need to make a living.
Not all debt is erased by bankruptcy. The debtor will still have to pay any back taxes, alimony, child support and student loans. The lawyer will try to negotiate new agreements that cover this type of debt. This ensures that the debtor’s entire debt structure is manageable. David S. Kohon is one of the Texas lawyers who help people who are deep in debt.
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