This test is the beginning inquiry to determine whether a person qualifies to file for Chapter 7 and what other options are open to him or her. This is a basic debt-to-income test that, far from being a death knell, is a preliminary step in getting out of debt and stopping hounding creditors.
A discharge of debt is a removal of responsibility from having to pay unsecured loans. This is the end result of declaring Chapter 7 bankruptcy.
Petitions are documents filed with the bankruptcy court for relief pursuant to the applicable chapter of the Bankruptcy Code. It often includes various schedules and related documents.
Under the new code, speaking with a certified credit counselor is mandatory and can be accomplished with a simple telephone call. This conversation is straightforward and should never be seen as a hurdle to overcoming financial difficulty.
Although the term does not appear in the bankruptcy code, the United States Supreme Court has recognized as far back as 1885 that the purpose of the bankruptcy act was to allow a debtor to keep what property was exempted by law, discharge certain debts, and have a fresh start. See Traer v. Clews 115 U.S. 528, 541, 6 S.Ct. 155, 160 (U.S.1885).