by Greenville Bankruptcy Attorney
John D. Compton, III
At the outset of any appointment for a bankruptcy consultation, clients are required by Court rules to read and sign the Information Letter issued by the United State Bankruptcy Trustee. Chapter 7 bankruptcy is designed to give Debtors a fresh start. This is how the Information Letter describes Chapter 7:
“Chapter 7 is designed for debtors in financial difficulty who do not have the ability to pay their existing debts. Debtors whose debts are primarily consumer debts are subject to a “means test” designed to determine whether the case should be permitted to proceed under chapter 7. If your income is greater than the median income for your state of residence and family size, in some cases, the United States trustee (or bankruptcy administrator), the trustee, or creditors have the right to file a motion requesting that the court dismiss your case under § 707(b) of the Code. It is up to the court to decide whether the case should be dismissed.
“Under chapter 7 you may claim certain of your property as exempt under governing law. A trustee may have the right to take possession of and sell the remaining property that is not exempt and use the sale proceeds to pay your creditors.
“The purpose of filing a chapter 7 case is to obtain a discharge of your existing debts. If, however, you are found to have committed certain kinds of improper conduct described in the Bankruptcy Code, the court may deny your discharge and, if it does the purpose for which you filed the bankruptcy petition will be defeated.
“Even if you receive a general discharge, some particular debts are not discharged under the law. Therefore, you may still be responsible for most taxes and student loans; debts incurred to pay non-dischargeable taxes; domestic support and property settlement obligations; most fines, penalties, forfeitures, and criminal restitution obligations; certain debts which are not properly listed in your bankruptcy papers; and debts for death or personal injury caused by operating a motor vehicle, vessel, or aircraft while intoxicated from alcohol or drugs. Also, if a creditor can prove that a debt arose from fraud, breach of fiduciary duty, or theft, or from a willful and malicious injury, the bankruptcy court may determine that the debt is not discharged.”
This description raises several questions which will be covered (as may be necessary) in an initial consultation:
- What is the means test?
- What is median income?
- What assets are exempt?
- What is an “asset” case: that is, when can a Chapter 7 Trustee take certain property for the benefit of creditors?
- What does a discharge mean?
- What debts cannot be discharged?
Future blogs will cover some of these questions. In the mean-time, if you have “more month at the end of your money,” and cannot pay your creditors, a bankruptcy consultation will explain whether or not Bankruptcy is a good option for you.