Chapter 7 Bankruptcy

Sometimes, it can be altogether too easy for one to build up large sums of debt that are impossible to pay off. When this happens, bankruptcy may be the only option for restoring one’s financial standing and resuming a less-stressed and financially stable life. Individuals have the option of filing for either Chapter 7 or Chapter 13 bankruptcy. In 2008, over 900,000 people filed for Chapter 7 bankruptcy, making it the most popular form of insolvency resolution in the United States.

Liquidation Bankruptcy

Chapter 7 bankruptcy is also known as liquidation bankruptcy because filers sell their non-exempt assets in order to make the money necessary to pay off their creditors. It is important for bankruptcy filers to understand the difference between exempt and non-exempt assets.

• Exempt assets are pieces of property that cannot be liquidated during Chapter 7 bankruptcy. Examples of exempt assets include up to a certain amount of equity in one’s personal residence, vehicle, home furnishings, and jewelry.
• Non-exempt assets are pieces of property that may be sold during the liquidation process. These typically include second vehicles or homes, expensive musical instruments or collections, and cash or bank accounts.

The Means Test

The means test is a measure used to determine whether or not an individual is eligible for Chapter 7 Bankruptcy. Families and individuals subject to the means test will undergo an investigation that will determine whether or not they have the means by which to pay off their debts. The means test compares the debtor’s average income to the median income of his or her state of residence.

Contact Us

If you find yourself in a situation of economic duress and you think that filing for bankruptcy may be the best option for you, then the Austin bankruptcy attorneys of Slater, Kennon & Jameson, LLP can help you begin this resolution process. Please contact our office today at 512-338-1100 to speak with one of our lawyers about your situation.