Bankruptcy is debtor protection provided by the federal government to help businesses and individuals repay their debts or eliminate them by means of liquidations or reorganizations. The Bankruptcy code is divided by chapters and that is how bankruptcies are referenced. A Chapter 13 bankruptcy is a bankruptcy where debt repayment plans are reorganized in a manner that allows the debtor the ability to repay those debts; however, that type of bankruptcy isn’t ideal for everyone and they made need to file a Chapter 7 bankruptcy. A Chapter 7 Bankruptcy is a liquidation bankruptcy where the debtor is only allowed to keep a certain amount of property, as described below, and all the other assets belonging to the debtor is sold off in an attempt to repay the creditors, the companies and people the debtor owes. A person is only allowed to file a Chapter 7 Bankruptcy every 8 years.

When a person files a bankruptcy petition, a Bankruptcy Estate is created. The Bankruptcy estate contains everything that the debtor owns and all of their equitable interests. This is then under the control of the Bankruptcy Trustee. The chapter 7 trustee is an individual appointed by the courts to administer the estate and is entrusted to try to find and liquidate all the assets of the debtor’s and repays the creditors as much as they can from the sale of the assets. Before the decision to file a Chapter 7 petition is done, a Disposable Income Test and a Means Test should be done to determine if the debtor meets the requirements necessary to file. The Disposable Income Test is used to determine whether the debtor has enough income left over after paying necessary monthly expenses, to pay off at least a portion of their unsecured debts. If the disposable income adds up to more than the statutory amount set for the debtor’s location, they will fail the means test and cannot file for Chapter 7 bankruptcy. The Means Test is the method used to determine if the debtor makes more than the median income level for their geographic location. If their income is less than the median amount, they are allowed to file; however, if they do make more than the median amount, then the Disposable Income Test must be used.

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There are many options for getting rid of your credit card debt. But are you confused by the large number of choices. Look around to find that you are not the only one who is confused. Most credit card users who have built up a huge debt are in the same state as you are. They are all confused by the choices open to them to eliminate credit card debt. Debt relief can be difficult to understand. You may have choice in the form of counseling, consolidation and debt settlement and bankruptcy. They are in the order of severity and should be applied in the same sequence. The bigger the debt, more complex will be the solution. Let us assume that you have a problem in managing your debt. Credit card debts are bothering you with your time management. Due to a badly managed debt plan you have been suffering financially too. Counseling is the best option for such issues. The counselors will help you to get things in order. They will also advise you to save some money and reduce your expenditure. The next situation one can look at is you have over $2000 in debt in three credit cards. The debt is gradually growing on its own due to interest and late fees. You are the right candidate for consolidation. The counselors will help you to transfer all the credit to one account and manage a lower rate of interest.

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