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Grafton Bankruptcy Facts

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by , 01-16-2013 at 05:42 AM (1378 Views)
A Chapter 7 bankruptcy is an effective intervention for wiping the financial slate clean and starting over. With a Chapter 7, the Bankruptcy Trustee will liquidate as many of the debtor's assets as possible to pay off all of the secured and unsecured debts. The bankruptcy stays on the debtor's credit report for 10 years.

How to Begin

A person who is encumbered with debt is usually a good candidate for a bankruptcy action. The best way for a debtor to find out if he or she will qualify for a Chapter 7 bankruptcy is to retain an attorney specializing in personal bankruptcy cases. This way, the debtor will have all the facts before filing and will make an informed decision on which bankruptcy he or she can file.

Means Test

The bankruptcy attorney will take down all of the debtor's financial information and proceed to run a means test on the debtor. If there is no "disposable income" after accounting for all of debtor's monthly payments, the debtor will be allowed to file for a Chapter 7 bankruptcy.

However, if the debtor does have some disposable income left over at the end of the month, chances are that the Bankruptcy Trustee will automatically convert the debtor's Chapter 7 to a Chapter 13 bankruptcy.

Chapter 13

A Chapter 13 bankruptcy is, in essence, a "payback plan" where the Trustee takes the disposable income figure and divides it up between the creditors. Then the debtor makes a single monthly payment to the Trustee who then makes a payment to each of the creditors. This plan can be between three to five years in length. Once the plan ends, the debtor no longer owes on those debts.


Grafton bankruptcy exemptions for a Chapter 7 include a homeowner exemption of $75,000. This means that if your home is worth $100,000 and has a mortgage balance of $75,000, the equity equals #25,000. This equity is less than $75,000 which means that this equity is exempt from being liquidated in the bankruptcy, and the debtors can stay in their home and continue making monthly payments.

Other exemptions in a Chapter 7 are furniture, apparel, jewelry, sports equipment and other personal property up to the amount of $12,000. Deposits of $5,000 or less are also exempt and up to $5,000 in one automobile per debtor.

Reasons for Bankruptcy

Some people have no other alternative except to file for bankruptcy. An attorney specializing in bankruptcy law can help debtors to make to most of a bankruptcy action by liquidating their property or repaying a portion of their outstanding debts.
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