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Why Hire a Bankruptcy Lawyer?

Also referred to as “Liquidation Bankruptcy”, if approved, Chapter 7 Bankruptcy will dismiss outstanding debts. This form of bankruptcy is available to both individuals and businesses with outstanding debts upon approval following the completion of the filing process. As our friends at CT Bankruptcy Attorneys often advise, many debtors may choose to enlist the assistance of a bankruptcy lawyer when they decide to declare bankruptcy. An experienced lawyer can help guide you through the complexities of the filing process and ensure accuracy every step of the way.

Chapter 7 Bankruptcy Eligibility

Individuals – Chapter 7 Bankruptcy is available to individuals who are unable to make regular monthly payments towards all debts and can provide relief regardless of the amount of debts

Businesses – If a business must terminate their enterprises following a bankruptcy declaration, they may choose to file for Chapter 7 Bankruptcy.

Understanding the Differences between Solvent and Insolvent Debtor Status

Both individuals and businesses may decide they need to file for Chapter 7 bankruptcy, regardless of whether they are solvent or insolvent. Some choose to seek professional legal assistance from a bankruptcy lawyer to aid in making the decision and for assistance with the filing process.


An individual or business is deemed insolvent when they cannot pay creditors, or when assets exceed their liabilities. There are three different tests to decide if an individual or business is insolvent, as covered by Section 123 of the Insolvency Act 1986:

• The Cash Flow Test – Can the individual or business pay its debts when they fall due?

• The Balance Sheet Test – Does the individual or business own more than it owes; do assets exceed liabilities?

• The Legal Action Test – Has a creditor taken legal action like a County Court Judgment (CCJ) against the individual or business?


An individual or company is solvent when assets exceed its liabilities and creditors can be paid in full, within 12 months of a debt falling due. However, just because an individual or company is financially viable, that does not necessarily mean it will continue to gain income or value.

The individual or company may decide to liquidate by means of Chapter 7 Bankruptcy if they have value in their assets, such as real estate, property, vehicles, stock etc. but the individual or company has no future use or purpose for such assets.

How a Bankruptcy Lawyer Can Help

The process of filing for Chapter 7 Bankruptcy may vary between states. Many individuals and businesses seek the assistance of a bankruptcy lawyer based in the state in which they reside.  A bankruptcy lawyer will help you navigate your state specific bankruptcy requirements and help ensure you are providing accurate information with the goal of achieving an outcome that is in your favor.