Many Arizona residents may be considering starting the new year with a clean slate, including a new start on their financial life. One way to achieve this new beginning is filing for Chapter 7 bankruptcy, commonly known as liquidation bankruptcy. Most unsecured debts and some forms of taxes are wiped out with this form of bankruptcy and it also puts an end to creditor harassment and wage garnishment. In addition to this, it is possible to get a stay on foreclosure proceedings as a result of filing for bankruptcy.
Before filing for Chapter 7 bankruptcy, one must determine whether they are eligible. The first thing to know about eligibility is that only individuals, partnerships, corporations and other business entities can file for Chapter 7 bankruptcy. However, if an individual has had a previous bankruptcy petition dismissed from the court in the last 180 days because they did not appear in court willfully, did not comply with court orders or voluntarily dismissed the previous case for various reasons, the debtor cannot file for Chapter 7.
Also, it is important to remember that, within 180 days of the filing, the debtor must obtain credit counseling from an agency that is approved by the court. If this requirement is not met the debtor is not eligible to file for Chapter 7 or any other chapter bankruptcy.
A fresh start-a discharge of debts-is only given as relief to individuals, not to partnerships or corporations. Once the debtor is considered eligible, relief is available to the debtor regardless of the amount of debt and also regardless of the debtor's solvency.
In order to better determine if one is eligible for Chapter 7 bankruptcy, Arizona residents may want to consider consulting an experienced bankruptcy attorney for guidance on how to begin the new year with a new start.
Source: United States Courts, "Liquidation Under the Bankruptcy Code," Accessed Dec. 30, 2014