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Am I eligible to file for Chapter 7 bankruptcy?

Debtors in Long Beach who are experiencing financial challenges might think they have no method to get back on stronger financial ground and get a fresh start. When bankruptcy is suggested, they might believe there is a stigma with it that they are not fulfilling an obligation or are doing something wrong. The reality, however, is that bankruptcy is a legal and reasonable strategy to improve financial standing. For individuals, Chapter 7 is a solid option, if they are eligible. The goal of Chapter 7 is to give debtors who have run into financial trouble an opportunity to get a fresh start. After the debts are discharged, the debtor will no longer be responsible for them. If there are liens on properties, a Chapter 7 bankruptcy does not clear it.

A debtor can file for Chapter 7 regardless of whether he or she is solvent or insolvent. A person who is seeking to file for Chapter 7 cannot file if there was a previous filing within 180 days and it had been dismissed because the debtor willfully failed to appear before the court, did not comply with the orders issued by the court or voluntarily dismissed the case after an attempt was made by creditors to take property upon which there were liens.

There can be no Chapter 7 filing completed until the debtor has taken part in credit counseling. The counseling agency must be approved by the court. In emergency circumstances or if the U.S. trustee finds that there are no agencies available to provide the necessary counseling, the case can be filed without it. When there is a debt management plan crafted with credit counseling, the court must receive it.

For people without secured debt, such as a home or vehicle over a certain value, Chapter 7 is the preferable choice to wipe out most unsecured debt. Knowing whether one meets the criteria for Chapter 7 is the first step toward filing, as the eligibility requirements are key to a successful completion of the process. There are alternatives available for people who do not meet the eligibility requirements for Chapter 7, including Chapter 13 and Chapter 11. A legal professional who has experience in all forms of bankruptcy can give advice and assistance.

Source: uscourts.gov, "Chapter 7 -- Bankruptcy Basics -- Chapter 7 Eligibility," accessed on Dec. 3, 2017

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