If you are facing bankruptcy, you are probably wondering what type of bankruptcy case you should file.

You may have seen a lot of information concerning Chapter 7 cases. What is Chapter 7? To begin with the fundamentals, Chapter 7 is a section of the federal Bankruptcy Code dealing with liquidation.

In a Chapter 7 bankruptcy case, the debtor (the person filing the case) turns his or her nonexempt property, if there is any, over to a trustee. The trustee liquidates the property - that is, sells it for cash. The trustee takes the proceeds of the sale of the debtor’s nonexempt property and pays the debtor’s creditors. In return, the debtor receives a CHAPTER 7 DISCHARGE (additional conditions apply - such as the debtor’s payment of the filing fee, eligibility for the discharge of debts and adherence to all of the orders and rules of the court).

Who should NOT file a Chapter 7 case?

There are a number of reasons a debtor may not be able to file a Chapter 7 case. Consider the following criteria:

• A person who is not eligible for a Chapter 7 discharge should not file a Chapter 7 case. Look at my post “Debt Discharge: 10 Reasons You Could Be Disqualified In a Chapter 7 Bankruptcy Case” for a specific breakdown of reasons that a person may not be eligible for a Chapter 7 discharge of debts.

• A person who has substantial debts that are not dischargeable under Chapter 7 should not file a Chapter 7 case.

• It is not usually advisable for a person with disposable income sufficient to make the required minimum payments to unsecured creditors to file a Chapter 7 case. In this scenario, a presumption of abuse will arise and the case will probably be dismissed or converted to Chapter 13. I’ve blogged about the presumption of abuse in Chapter 7 cases before; see “Chapter 7 Bankruptcy: Don’t ‘Abuse’ the System.”

In this post, I’ve condensed some of the common reasons Chapter 7 might not be right for a person filing bankruptcy. It is, however, the right choice for many people facing bankruptcy. Until you go over your case with an experienced bankruptcy attorney, it is difficult to pinpoint your best course of action.

Thanks for reading and let me know if you have any questions,
Matt
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Matt Hughson

New York Bankruptcy Lawyer

Ziff Law Firm, LLP
303 William St., Elmira, NY 14901
Tel: (607) 733-8866
Fax: (607) 732-6062
Toll Free: 1-800-943-3529
Email: mhughson@zifflaw.com
Web: http://www.zifflaw.com

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