Chapter 7 Bankruptcy

What is Chapter 7 Bankruptcy?

Certain types of debt typically cannot be discharged in a Chapter 7 bankruptcy. These include government debts, domestic support obligations (like child support or alimony), criminal fines, debts involving fraud, court-ordered restitution, and most student loans. These obligations usually remain even after your bankruptcy is complete.

You may be able to keep certain assets through exemption laws, which protect property from being sold to pay creditors. The amount you can exempt depends on the type and value of the asset, and in many cases, you can choose to apply either state or federal exemption rules to maximize what you can retain.

The Pros

• The Chapter 7 bankruptcy process is fast, compared to other types of bankruptcies. The debtor can expect his or her debts to be discharged in three to six months in most cases.
• One of the primary purposes of Chapter 7 bankruptcy is to assist individuals and businesses in relieving the amount of their debt obligation so that they can make a fresh start and rebuild.
• Because of the permitted exemptions in your state or through federal bankruptcy exemptions, you likely will be able to keep many of your assets, and — depending on the facts of your case — possibly all of your assets.

The Cons

• Due to the Bankruptcy Abuse Prevention and Consumer Protection Act, which went into effect in 2005, only those earning less than the median income in their state and county qualify to file Chapter 7. Previously, anyone could discharge their debts through Chapter 7 bankruptcy, regardless of income.
• With other types of bankruptcies, the debtor is permitted to include attorneys’ fees in their repayment plan. However, with Chapter 7 bankruptcy, there is no repayment plan, and attorneys’ fees will generally be required up front before work will begin on your case.
• A Chapter 7 bankruptcy can appear on your credit report for eight (8) to ten (10) years although your ability to obtain new credit will most likely not be impacted during the full reporting period.

Who Is Eligible?

In order to be eligible to file Chapter 7 bankruptcy, the following criteria must be met:

• An individual, partnership, or corporation may qualify as a Chapter 7 debtor.
• The individual debtor must make less than the median income in the state and county in which he/she resides to pass a means test qualification step.
• The individual must not have had a previous bankruptcy case filed within the past eight (8) years or a prior case that was dismissed for lack of cooperation or bad faith.
• The debtor has received credit counseling from an approved credit counseling agency within 180 days prior to filing the bankruptcy.

Don't wait. Protect what's yours.

If you feel like your quality of life is being consumed by debt and you are wondering if Chapter 7 bankruptcy is right for you, let us help you understand your legal options. The facts of each case are unique, but debt relief is an option for you.

DISCLOSURE   We are a debt relief agency.  We help people file for bankruptcy relief under the Bankruptcy Code.