Chapter 7 Bankruptcy

Who Can File Chapter 7 Bankruptcy

To qualify for relief under chapter 7 of the Bankruptcy Code, the debtor may be an individual, a partnership, or a corporation or other business entity.

Relief is available under chapter 7 irrespective of the amount of the debtor’s debts or whether the debtor is solvent or insolvent.

My Spouse is Filing Bankruptcy. Do I have to file too?

Married individuals are not required to file bankruptcy together. However, married individuals must gather information for their spouse regardless of whether they are filing a joint petition, separate individual petitions, or even if only one spouse is filing. In a situation where only one spouse files, the income and expenses of the non-filing spouse are required so that the court, the trustee and creditors can evaluate the household’s financial position.

Do I Make Too Much to File Chapter 7 Bankruptcy?

If an individual’s “current monthly income” is less than the state median, one qualifies to file a Chapter 7 Bankruptcy.

If an individual’s “current monthly income” is more than the state median (See the chart below), the Bankruptcy Code requires application of a “means test” to determine whether the chapter 7 filing is presumptively abusive. Many people who believe that they make too much to file Chapter 7 Bankruptcy are surprised to learn they qualify for Chapter 7. Debtors should always have their attorney determine whether they qualify for a chapter 7 bankruptcy prior to considering a chapter 13 since a repayment plan is required in a chapter 13.

State	One Person	Two People	Three People	Four People
Ohio	$40,471.00	$50,253.00	$58376.00	$70,599.00
Michigan	$43,677.00	$50,079.00	$58,467.00	$70,237.00

Credit Counseling

Individuals who are filing Chapter 7 must receive credit counseling from an approved credit counseling agency. After filing, individuals must take the Debtor Education course. Link to www.greenpathbk.com

What is Liquidation?

Debtors are allowed to keep certain “exempt” property, but a trustee will liquidate the debtor’s remaining assets. Accordingly, potential debtors should realize that the filing of a petition under chapter 7 may result in the loss of property.Here are some examples of current exemptions:

	Ohio	Michigan (Federal Exemptions)
Cash / Bank Accounts	$425.00	N/A
Motor Vehicle	$3,450.00	$3,450.00
Household Goods & Furnishings, Wearing Apparel, etc.	$11,525.00	$11,525.00
Real Estate	$21,625.00	$21,625.00
Misc Jewelry	$1,450.00	$1,450.00
Miscellaneous	$1,150.00	N/A
Tools of the Trade	$2,175.00	$2,175.00
Retirement Accounts	Unlimited	Unlimited

Filing Fees

Court costs are $306.00 fee in connection to a Chapter 7 Bankruptcy.

($245 case filing fee, a $46 miscellaneous administrative fee, and a $15 trustee surcharge)

Does filing bankruptcy “STOP” garnishments and sheriff sales?

Filing a petition under chapter 7 “automatically stays” most collection actions against the debtor or the debtor’s property. As long as the stay is in effect, creditors generally may not initiate or continue lawsuits, wage garnishments, or even telephone calls demanding payments.

The Meeting of Creditors

Between 21 and 40 days after the petition is filed, the case trustee will hold a meeting of creditors. During this meeting, the trustee puts the debtor under oath, and both the trustee and creditors may ask questions. The debtor must attend the meeting and answer questions regarding the debtor’s financial affairs and property. If a husband and wife have filed a joint petition, they both must attend the creditors’ meeting and answer questions. Bring your Driver’s License and Social Security Card.

Discharge

The purpose of Chapter 7 Bankruptcy is to give an honest individual debtor a “fresh start.” Once a debtor receives a discharge, the debtor has no liability for discharged debts.

Some types of debts are not discharged: alimony and child support, certain taxes, debts for certain educational benefit over payments or loans made or guaranteed by a governmental unit, debts for willful and malicious injury by the debtor to another entity or to the property of another entity, debts for death or personal injury caused by the debtor’s operation of a motor vehicle while the debtor was intoxicated from alcohol or other substances, and debts for certain criminal restitution orders.

Reaffirmation Agreements

A reaffirmation is an agreement between the debtor and the creditor that the debtor will remain liable and will pay all or a portion of the money owed, even though the debt would otherwise be discharged in the bankruptcy. If the debtor decides to reaffirm a debt, he or she must do so before the discharge is entered.