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Can I file for Chapter 7 bankruptcy?

Debt is something that affects everyone in Illinois and throughout the nation. In some instances, it comes about due to unexpected life changes, loss of employment, medical problems or for a multitude of other reasons. Striving to eliminate debt might seem like a challenge, but when it has reached a point where there is nowhere else to turn and the stress has become unbearable, Chapter 7 bankruptcy is an alternative. Before moving forward, however, it is essential to know about the eligibility requirements to file.

For a person to be able to file for Chapter 7, it must be an individual, a partnership, a corporation or another type of business. There will be a means test for individuals. Once that hurdle is passed, it is possible to file for Chapter 7. This is true regardless of how much the debtor owes and the person's solvency or insolvency meaning they do not have to be completely broke to file for Chapter 7.

A person cannot file for Chapter 7 or any other type of bankruptcy if there was a dismissal of a bankruptcy filing in the prior 180 days because of a willful failure to appear or a lack of compliance with court orders. It is also not possible to file if, in the previous 180 days, the debtor voluntarily dismissed the case when the creditors tried to get relief from the court to recover property that had liens upon it. The person who is filing must also have received credit counseling in the previous 180 days. This must be from an approved credit counseling agency. If it is an emergency circumstance, the U.S. trustee can decide that there are not sufficient agencies to provide that counseling. If there is a debt management plan created in the counseling, this must be filed.

Chapter 7 is meant to discharge debts so the debtor can have a restart in his or her financial life. Once the Chapter 7 is completed, the debtor no longer is liable for the debts that were discharged. There is no guarantee that the Chapter 7 will lead to a discharge, but it does usually result in the discharging of debts. With a bankruptcy, any lien on a property will not be eliminated.

For those who are seeking to eliminate debt, Chapter 7 bankruptcy is a viable option if they meet the criteria. Discussing the matter with an attorney who is knowledgeable about debt relief can provide information and assistance regarding the details of Chapter 7 and help with moving forward for a fresh financial start.

Source: uscourts.gov, "Chapter 7 -- Bankruptcy Basics -- Chapter 7 Eligibility," accessed on May 2, 2017

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