Chapter 7 Bankruptcy - Important Facts
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Although Chapter 7 bankruptcy provides many people with bankruptcy alternatives and a new beginning concerning their finances, it is not a panacea for their problems. The courts do not just grant a complete discharge for debts without fully investigating the circumstances surrounding the debt. People who file for a discharge are obligated to undergo a “means test,” which is a comparison of the person’s monthly income to that of the state’s median income. Due to the new law, bankruptcy petitions are subject to greater scrutiny than in previous years and they require the signature of a lawyer. Bankruptcy filings in the past year also affect the status of one’s petition according to the new guidelines. This helps the courts to decide if the person is even eligible for a complete discharge.
Courts do not tolerate abuse of the bankruptcy system. It was created as an financial alternative to people who truly cannot repay their debts. Unfortunately, too many people have irresponsibly accumulated a bunch of debt and then petitioned for the courts to discharge them through Chapter 7 bankruptcy procedures. The new codes strive to not only discourage this practice but also punish those who participate in the abuse.
Read the full article here: Chapter 7 Bankruptcy
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