Any debt that remains outstanding once a chapter 7 bankruptcy has been discharged is no longer the responsibility of the bankrupt and no further attempt at payment may be made by any creditor for any outstanding debt covered by the bankruptcy.
Under recent legislation, a means test has been introduced to ensure that everyone filing under chapter 7 is qualified to do so. It is therefore most important that anyone considering filing under chapter 7 bankruptcy employs the services of a qualified professional to review their financial position, and advise whether or not a chapter 7 bankruptcy is feasible and will result in a discharge.
It usually takes 60 to 90 days for the discharge order to be issued after the meeting of creditors. This is usually a formality and over 90% of chapter 7 bankruptcy cases are discharged. However, it is possible for a creditor to object to a chapter 7 filing, in which case the discharge can be delayed and in some cases, depending on the financial circumstances of the applicant, the filing dismissed or altered.
A chapter 7 bankruptcy discharge is dependent on a number of things and the court can legally deny a discharge for the following reasons:
- a failure or refusal to supply the court with the required financial information.
- a failure to declare certain assets that the applicant is known to have in their possession.
- committing certain illegal acts under bankruptcy legislation.
- it can be the case that an individual will transfer ownership of assets so that they are not sold but retained by the individual fraudulently after discharge which denies creditors funds that they would have had, had the assets been sold.
Under the 2005 legislation, it is now a condition that anyone applying for chapter 7 bankruptcy attends a financial management course, partly to ensure that bankruptcy is the only remaining option. Failure to attend such a course can result in the court refusing a discharge.
In order to retain certain items after bankruptcy, for example a car, the bankrupt may enter into an agreement with the creditor that as long as repayments continue to be made the vehicle can be kept and at the same time the creditor will not make representations for repossession.
Whilst a reaffirmed debt may be a possibility for some individuals, it should be noted that even after the bankruptcy has been discharged, the creditor has the right to repossess the goods if the repayments are not kept up.
A reaffirmation will only be granted after close examination of the bankrupt financial situation, and if it is shown that the bankrupt cannot be considered sufficiently solvent to maintain the required repayments, reaffirmation will not be allowed.
Chapter 7 bankruptcy is not appropriate if the individuals financial situation is compromised due to things like unpaid tax, alimony payments and student loans. This is not an exhaustive list, but such financial demands are not discharged and always have to be repaid.
No comments:
Post a Comment