Chapter 7 Bankruptcy FAQ’s
Chapter 7 Bankruptcy can help wipe out unsecured debts within months, but your trustee can sell your nonexempt property to pay your creditors the money you owe. In contrast, you can keep your assets under Chapter 13 bankruptcy while making monthly payments to your creditors.
The Bankruptcy Means Test determines your eligibility for Chapter 7. In simple terms, when comparing your current monthly income against the median income for a household of your size in Pennsylvania, if it is equal to or less than the median, you are eligible for Chapter 7. If you have higher income, under circumstances like recent job loss or reduction in pay, you may be able to file under Chapter 7.
You are required to undergo credit counseling before filing for bankruptcy. Next, collect all financial paperwork that will help your attorney determine your eligibility for Chapter 7 and proceed with a petition. Once it is filed, the court will place an automatic stay that stops payment collection, housing foreclosure, or eviction. A court-appointed trustee will call a Section 341 Meeting of Creditors. Following the meeting, the trustee will liquidate nonexempt property and distribute the proceeds to creditors.