Chapter 7 Bankruptcy
What is Chapter 7 Bankruptcy?
A chapter 7 bankruptcy case does not involve having to repay your debts. Instead, the bankruptcy trustee gathers and sells your nonexempt assets and uses the money from those assets to pay people you owe money to. In addition, the Bankruptcy Code and Arkansas Law will allow you to keep certain “exempt” property. However, the trustee will liquidate any nonexempt property you have.
What is the role of a trustee in a Chapter 7 Bankruptcy case?
Who is eligible for Chapter 7 Bankruptcy?
To qualify under chapter 7 of the Bankruptcy Code, you may be an individual, a partnership, or a corporation or other business entity. Subject to the means test described above for individual debtors, relief is available under chapter 7 irrespective of the amount of the debtor’s debts or whether the debtor is solvent or insolvent. An individual cannot file under chapter 7 or any other chapter, however, if during the preceding 180 days a prior bankruptcy petition was dismissed due to the debtor’s willful failure to appear before the court or comply with orders of the court, or the debtor voluntarily dismissed the previous case after creditors sought relief from the bankruptcy court to recover property upon which they hold liens. 11 U.S.C. §§ 109(g), 362(d) and (e). In addition, no individual may be a debtor under chapter 7 or any chapter of the Bankruptcy Code unless he or she has, within 180 days before filing, received credit counseling from an approved credit counseling agency either in an individual or group briefing. 11 U.S.C. §§ 109, 111. There are exceptions in emergency situations or where the U.S. trustee (or bankruptcy administrator) has determined that there are insufficient approved agencies to provide the required counseling. If a debt management plan is developed during required credit counseling, it must be filed with the court.
One of the primary purposes of bankruptcy is to discharge certain debts to give an honest individual debtor a “fresh start.” The debtor has no liability for discharged debts. In a chapter 7 case, however, a discharge is only available to individual debtors, not to partnerships or corporations. 11 U.S.C. § 727(a)(1). Although an individual chapter 7 case usually results in a discharge of debts, the right to a discharge is not absolute, and some types of debts are not discharged. Moreover, a bankruptcy discharge does not extinguish a lien on property.
Arkansas Median Income for Family Size as of October 24, 2016
|1 Person Family||$38,373.00|
|2 Person Family||$48,781.00|
|3 Person Family||$51,605.00|
|4 Person Family||$60,549.00|
|5 Person Family||$68,949.00|
|6 Person Family||$77,349.00|
|7 Person Family||$85,749.00|
|8 Person Family||$94,149.00|
|9 Person Family||$102,549.00|
|10 Person Family||$110,949.00|