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Understanding the eligibility requirements for Chapter 7

A common concern among those who are having financial problems in Tennessee and across the country is whether or not they meet the eligibility requirements to file for Chapter 7 bankruptcy. Before moving forward with filing for Chapter 7, it's important to know what the eligibility requirements are so time and money won't be wasted when there are other preferable and more applicable alternatives available. When the details are understood, the decision of whether or not Chapter 7 is the best choice will be much easier.

In order to qualify to file for Chapter 7, the debtor is required to be a business entity, a corporation, a partnership or an individual. Individual debtors are required to meet the means test. It is irrelevant whether or not the debtor is solvent. However, a person who is considering filing for Chapter 7 can't file if there had been a bankruptcy proceeding in the previous 180 days and it had been dismissed because the debtor willfully didn't appear when required to do so, failed to comply with court orders or the proceeding was dismissed voluntarily when the creditors tried to gain relief and recover property that had were subject to liens.

It is also required that the debtor filing for Chapter 7 received credit counseling within the prior 180 days and it was provided by a credit counselor that had been approved to give assistance in this way. It must have been given to an individual or to the group that is choosing to file. Exceptions are possible for those who are in an emergency circumstance or where the administrator of the bankruptcy or the trustee determines that there wasn't a sufficient agency to give the necessary counseling.

The idea of a bankruptcy is to help the debtor clear the debts and have a fresh financial start without liability for debts that were discharged. For Chapter 7, this option is only for individuals and not for those involved in a corporation or partnership. It is possible that there won't be a discharge of some debts, depending on the circumstances. Filing for Chapter 7 will not eliminate a property lien, for example. When having financial issues, Chapter 7 bankruptcy is a viable option for many. The key before moving forward is to discuss the matter with a legal professional experienced in Chapter 7 bankruptcy.

Source: USCourts.gov, "Chapter 7 Eligibility," accessed on Nov. 30, 2014

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Hixson, TN 37343

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