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BANKRUPTCY This article is intended to provide some general bankruptcy information and is certainly not intended to replace the tailored information a debtor will receive from an attorney. Bankruptcy is governed by Federal Law (Title 11 of the US Code separated into individual Chapters, each dealing with a different type of bankruptcy) but the bankruptcy laws of each state also play an important part; consequently, though there are bankruptcy kits, you will probably need a lawyer to successfully file and a lawyer search should focus on a bankruptcy attorney or bankruptcy law firm licensed in the debtor’s state of residence. The attorney licensed in your state can tell you how to file for bankruptcy in a federal court within your…show more content…
The debtor is allowed to keep certain “exempt” property, which varies from state to state but usually includes Social Security payments, unemployment compensation, household goods and appliances, tools of your trade, books, a limited amount of equity in your home, and a limited amount of equity in a car or truck. The debtor must surrender all non-exempt property to a court-appointed trustee who liquidates that non-exempt property and distributes the proceeds to creditors. When the process is complete, the debts are discharged in bankruptcy. In order to use Chapter 7, a debtor must pass a “means test” to see whether he/she is eligible; if the debtor fails the “mean test,” his/her case will be dismissed and/or may have to convert to a Chapter 13 bankruptcy case. While the ideal of Chapter 7 is complete debt relief, there are exceptions: if a debtor is found to have concealed some financial information and/or records, the court will not grant a discharge of debt; also, the court will not discharge certain types of debts such as student loans, alimony, child support and some taxes. In addition, secured creditors have more protection than unsecured creditors; for example, a creditor with a secured interest in the debtor’s car can repossess the car even if the debt is discharged, unless the debtor “reaffirms” the debt or surrenders the car. The debt relief provided by Chapter 7 Bankruptcy has significant consequences and can be granted only once every 8 years, so filing

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