No. The Bankruptcy Code provides that a debtor filing for bankruptcy can keep certain assets for a "fresh start" by exempting property from the bankruptcy estate.
Will I be allowed to file bankruptcy?
There are presently no fixed income standards for filing bankruptcy. The critical question asked about those filing Chapter 7 is whether a debtor has sufficient funds after payment of his necessary future living expenses to repay his debts.
The United States Trustee or the Chapter 7 trustee can seek to have a debtor's case dismissed for "substantial abuse" if the debtor's income is sufficient to repay a significant portion of the scheduled debts. 11 U.S.C. 707(b). The real expectation is that debtors who are challenged in this way will convert their case to Chapter 13.
The law on this subject is not well developed and the attitudes of trustees and judges about what is "abusive" varies from district to district.
This concept does not apply to Chapter 7 debtors whose debts are primarily business debts, tax debt, or to those filing Chapter 13.
What do I have to do to file bankruptcy?
A bankruptcy case is begun by filing a petition, schedules of assets and liabilities, and a statement of financial affairs with the bankruptcy court and paying the filing fee. Browse downloadable versions of the official bankruptcy forms.
You will be required to attend at least one meeting of creditors (the § 341 meeting), in which the trustee and creditors who choose to come can ask you questions under oath about your financial affairs.
How long does it take?
The process in Chapter 7 from filing to receipt of the discharge order is between 3 and 6 months, usually. During that period, the debtor generally does not have to do anything other than attend the first meeting of creditors. The most time consuming part of filing bankruptcy is usually preparing the schedules necessary to file the case.
The discharge affects debts that existed on the date the case was filed or have their origin in facts that occurred before the case was filed.
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