Chapter 7 Bankruptcy Laws

For Americans struggling with debt, filing Chapter 7 bankruptcy can be the first step toward real financial relief. But figuring out the intricacies of Chapter 7 bankruptcy law can seem almost as overwhelming as dealing with the bills each month.

A bankruptcy lawyer can break down the jargon and help you understand the bankruptcy process. We can connect you with a local bankruptcy attorney–simply fill out the below form to be connected today:

Be sure to also take a look at this summary of key laws that may affect your Chapter 7 case.

Understanding BAPCPA, the New Bankruptcy Law

In 2005, Congress voted to pass the Bankruptcy Abuse Prevention and Consumer Protection Act, commonly called BAPCPA.

This new bankruptcy law has resulted in some changes to the Chapter 7 bankruptcy process; however most people who qualified to file Chapter 7 under the old law would still be eligible to file under the new bankruptcy law.

Below we’ve outlined some of the most important Chapter 7 bankruptcy laws, which include the changes that BAPCPA introduced.

Chapter 7 Bankruptcy Laws

Before Filing Chapter 7 Bankruptcy

  • The Chapter 7 Means Test: The means test is a qualifying test that you must “pass” in order to receive protection under Chapter 7 of the U.S. Bankruptcy Code. The test requires you to compare your income to the median income of a family your size in your state. If your income is lower than the median, you “pass” and can file under Chapter 7. If not, you may still qualify – you just have to perform further calculations under the means test.        Review state median income tables.
  • Credit Counseling Briefing: If you want the bankruptcy court to accept your petition, you must receive a credit counseling briefing from an accredited budget and credit counseling service before filing. Chapter 7 bankruptcy law requires this briefing to make sure you, the petitioner, know all your options for getting out of debt. Want to learn more?     Check out this accredited counseling service.

After Filing Chapter 7 Bankruptcy

  • Chapter 7 Exemptions: These exemptions serve to protect your possessions from creditors. That means that when your bankruptcy trustee raises money to pay your creditors by selling your belongings, your exempt belongings are off limits. Exemptions vary by state, but generally include a home, work tools, clothes, etc.
  • Debtor Education Course: Before you’re eligible for your Chapter 7 discharge, you must complete a debtor education course. Like the credit counseling briefing, this is part of Chapter 7 bankruptcy law that was introduced by BAPCPA. The course is designed to help you develop skills for budgeting, managing money and making the most of your fresh start.     Check out this accredited provider.

The Benefit of a Bankruptcy Lawyer

While it may seem obvious, we feel it’s important to note that Chapter 7 bankruptcy laws and protections apply only to those who follow broader federal laws.

Whether intentional or unintentional, actions such as trying to conceal property, taking on new debt with the intent of having it discharged in bankruptcy and prioritizing debt repayment to family members and friends are illegal and will likely hurt your case.

A bankruptcy lawyer is a good resource who can make sure you’re following Chapter 7 bankruptcy laws and help your case move as smoothly as possible. Connect to a bankruptcy lawyer in your area today.