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Chapter 7 Bankruptcy is a “liquidation” bankruptcy. In Chapter 7, the individual debtors keep certain assets that are exempt (certain equity in the house and car, furniture, etc.). The remaining (non-exempt) assets, if any, are sold by the bankruptcy trustee and the proceeds are distributed to the creditors. Individuals and companies may file a Chapter 7 bankruptcy. Which assets are exempt is determined by state law. For example, in Arizona, the following assets are exempt: $150,000 equity in a home, a car up to $6,000, household items up to $6,000, the amount of $300 in a bank account, etc. Retirement plans, such as 401(k) and IRA, are exempt as well.
If most of the debts are consumer debts, the eligibility is determine by a “means test”. In the “means test”, your gross annual income will be measured against the median income of the state the debtors live in. For example, the median income in Arizona is as follows: $43,397 (for household size of one), $57,620 (for household size of two), $62,002 (for household size of three) and $71,867 (for household size of four). If the debtors pass the means test, before they can file bankruptcy, they need to take a credit counseling course. Contact us via email or call us at (480) 425-2009 for a FREE BANKRUPTCY CONSULTATION and we will help you determine if bankruptcy is right for you!
Juras Law Firm will can make the process of filing for bankruptcy an easier one for you. We will help you eliminate or reduce your debts and protect your assets. You can file for Chapter 7 bankruptcy without hiring the services of an experienced bankruptcy lawyer, but you need to understand that you will be held to the same standards by the judge as one who is represented by a lawyer. Juras Law Firm is based in Phoenix Arizona and is dedicated to offering corporate and individual clients the best legal services.