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Judge finds no abuse of Chapter 7

Massachusetts residents who are seeking a fresh financial start by filing for Chapter 7 bankruptcy often have questions about how much of their personal assets will be protected by the courts. A Virginia bankruptcy court decision provides some insight into the inner workings of how courts treat real estate assets while offering debt relief. In this case, the appointed trustee reported that the debtor had two homes.

The case involved a married man who filed for debt relief without his wife joining the case. He owned a home with two mortgages, and his wife purchased a larger home, which allowed her mother to occupy the first one. He had both prior mortgages and $60,000 in student debt to contend with at the time of filing for Chapter 7 bankruptcy.

The trustee informed the court that he was supporting two households, which could be considered an abuse in some instances. In Chapter 7, all the individual's assets except protected ones are sold to satisfy creditors of record. The contention by the trustee was that one of these homes could be sold . The judge, however, decided no abuse had taken place after studying the debtor's lifestyle and expenses.

Some strict federal and guidelines do exist regarding Chapter 7. In addition, there are specific eligibility requirements, and debtors must first go through an approved credit counseling course before they are allowed to file a petition. An attorney who has experience with Chapter 7 might be of assistance to a person who is considering this particular form of debt relief.

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