Chapter 7 - Liquidation

Chapter 7, is also known as a liquidation. Under this Chapter, candidates' eligibility is determined by reviewing their income for the 6 months prior to their considered filing date. This is known as the 707 Means Test.

Under the means test, a chapter 7 debtors eligibility is determined by their average income less allowed deductions as provided by Census Bureau and IRS. (Which can be found here).

Eligible candidates will then need to provide detailed information about their financial information, including but not limited to, income, expenses, personal property (such as cars, trucks, home goods, furniture, clothing, electronics, arts, collectables), real property (primary homes, investment properties, secondary homes and all other real property anywhere in the world), dependants and household size.

Once eligibility is determined and the petition is being prepared, candidates, also known as debtors in bankruptcy, will be required to take a credit counseling course and debt management course, prior to filing for bankruptcy and after filing for bankruptcy, respectively.

Approximately, thirty days (30) after the petition is filed, debtors are required to attend a Section 341(a) Creditors Meeting. This meeting allows for the trustee of the estate and any creditors to address any questions to the debtor. The assets, if any, (beyond those exempted by local state law, click here for additional information regarding exemptions)

Should no objections arise, ninety days (90) after the 341(a) creditor meeting, the court will grant a discharge order where as specific debt is discharged, and assets, if any, available to be paid to the creditors is paid out thereby relieving the debtor for the remaining debt. Thereby concluding the bankrupt estate.

For additional information please email us at  Omid@LoomLegal.com or contact us directly at (310) 594-7646.