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Chapter 7 Bankruptcy Rules

Chapter 7 bankruptcy is the most common kind of bankruptcy in the United States. It handles the process of liquidation as per the laws. It completely liquidates a person’s property and uses the money to pay off the creditors. There are various rules and regulations that one must follow when filing for a chapter 7 bankruptcy. It may not be easy to remember and understand all of these rules and this can lead to a lot of questions. Given below are some of the most commonly answered questions by Experts about Chapter 7 Bankruptcy.

What can an individual do if their credit report wrongly shows two loans?

The individual may not be able to take off the loans from their credit report if they are wrongly reported. However, the individual may get the report corrected. In order to do this, the individual may need a copy of their credit report. They may try to get a copy of the report online. The individual will need the report along with the credit file number. Once the individual gets the file number, they may go to each of the credit bureaus and order the credit report online. As and when the individual gets access to the reports, they need to be printed and saved to the computer. The individual may then initiate the dispute process. The entire dispute procedure may normally take about 21-30 days to complete. The credit bureaus will notify the individual via email once the disputes have been resolved.

Is It required to pay off a secured debt if a person files for chapter 7 bankruptcy?

A person may not be required to pay off any secured debt once a chapter 7 bankruptcy is filed if these debts are included in the bankruptcy. However, if these debts are not included and the individual decides to reaffirm them, then he/she may have to continue repaying them.

Can an individual apply for series 6 and 7 license if they have filed for bankruptcy?

An individual may not be able to apply for series 6 and 7 licenses within 7 years of filing bankruptcy. He/she may apply for these licenses after 7 years.

How long after a bankruptcy has been discharged can a person apply for a Federal Housing Administration (FHA) loan?

As per the rules of FHA, a person may be eligible for a FHA loan only after 2 years after the bankruptcy has been discharged. The time frame will be calculated from the day the bankruptcy was discharged and not from the day it was filed.

Can a person withdraw from his/her 401 (K) account after his/her bankruptcy is completed?

Once the bankruptcy is completed, an individual may be able to withdraw funds from the 401(K) account. However, in some situations, it may be expensive to withdraw these funds. It may also be difficult to get the withdrawal approved.

Do people have to stop working before filing for bankruptcy?

A person may not be required to stop working before he/she files for bankruptcy.

Can people apply for a second chapter 7 bankruptcy if one has already been discharged? Will this put an automatic stay on the individual’s house?

If one chapter 7 bankruptcy has already been discharged, the individual may have to take a means test before filing for the second chapter 7. The IRS will decide if the individual may apply for the bankruptcy or not based on the means test. A chapter 7 bankruptcy may not put an automatic stay on the individual’s house.

How is the value of property determined in a chapter 7 bankruptcy?

According to law, the value of property is determined on the basis of the fair market value in a chapter 7 bankruptcy.

It may be frustrating if you are faced with a financial situation and do not know how to come out of it. Having a long list of creditors whom you owe money can add more trouble to you situation. It is important that you are aware of all the options you have in such a situation so that you can come out of the financial problem. Filing for a chapter 7 bankruptcy may be one such option. However, you may not automatically become eligible for this. There are certain rules and criteria that must be fulfilled in order to be eligible for a chapter 7 bankruptcy. You may ask an Expert if you have any questions regarding this form of bankruptcy.
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