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Know some points that are important for Chapter 7 bankruptcy

Many people get into debt and then realize they are in over their head. When bankruptcy comes up, there is often a discussion about which chapter is that best one for the situation. For people who are considering filing a Chapter 7 or liquidation bankruptcy, there are some clues that might point to this being a less than desirable option for you to take.

There are some cases in which creditors might claim that purchases were made fraudulently. If this is proven, those debts won’t qualify for discharge, so this might make filing bankruptcy unnecessary. Recent charges on a credit card or charging more than what you know you could meet the minimum payment on can lead to a claim of fraudulent charges.

If you don’t have any assets that can be claimed to satisfy at least part of your debts, you are known as judgment proof. This might mean that you can’t file a Chapter 7 bankruptcy because the creditors wouldn’t be able to take legal action to recover money from you through the liquidation of your assets.

You have to meet asset and income criteria to file for Chapter 7 bankruptcy. These limits are set to help ensure that people who are able to make payments on their debts don’t try to use this chapter for protection.

It is possible that you will lose valuable property when you file for this type of bankruptcy. All property is classified as exempt, which means it can’t be taken to satisfy the debts, or nonexempt, which means the asset can be liquidated to pay off at least a portion of the debt.

Another possibility is that you will have too many debts that survive the bankruptcy case. If this is the situation, you filing won’t make any difference. Some of these debts include recent tax debts, child support, student loans and most court-ordered payments for fines, judgments and restitution.

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