CHAPTER 7 BANKRUPTCY
WHAT IS A CHAPTER 7 BANKRUPTCY?
“Chapter 7” refers to chapter 7 of the U.S. Bankruptcy code, or a “liquidation” bankruptcy. It is referred to as a liquidation because people filing a Chapter 7 bankruptcy may be required to liquidate, or give up assets that exceed exemptions for each filing person. In actual practice however, the vast majority of people filing chapter 7 bankruptcy do not need to liquidate any of their individual property. This is because filers are given “exemptions” from the liquidation, allowing them to keep a reasonable amount of property in different categories. Exemptions are discussed below. In a bankruptcy, the person filing bankruptcy is referred to as a “debtor,” and the organizations or persons to whom money is owed are referred to as “creditors.” A “secured creditor” is one that is owed money by the debtor, and the debtor has pledged some piece of property as collateral (typically a house or car) for the debt.
WHAT EFFECT WILL A BANKRUPTCY HAVE ON ME?
Immediately upon filing, creditors will stop their collection actions against you. This means that they can no longer call you, all garnishments on your pay will be stopped, any ongoing legal proceedings against you must cease. If you are using an attorney to handle your bankruptcy, all communication from the creditors will go to your attorney. However, if you have a secured debt, you will still need to make payments on that debt if you wish to keep the secured property (a secured debt is one that is “attached” to a particular piece of property, such as a car/car loan or a house/mortgage).
A bankruptcy filing will stay on your credit report for ten years. During this time, it does not mean that you cannot obtain new credit. However, for a time, it may make it more difficult to obtain credit on terms as favorable as before. (see the Credit discussion below)
WHAT ARE EXEMPTIONS?
Exemptions are limits set by law as to how much property each person filing a Chapter 7 may keep, while still wiping out his or her debts. Examples of some exemptions are those for a home, pensions/retirement, a car, and personal property, such as clothing, household furnishings, jewelry, tools, and other items. We can talk to you about the specific exemptions and their amounts.
WHAT KIND OF DEBTS CAN BE DISCHARGED?
Typical types of debts discharged in a Chapter 7 bankruptcy are credit card debts, unsecured bank loans, monies owing from the repossession of a car, medical bills, and lawsuit judgments. Also, loans that are secured by a piece of property, such as a car or house may be discharged, if the individual is giving up the car or house.
WHAT KIND OF DEBTS CANNOT BE DISCHARGED?
Generally, the types of debts that CANNOT be discharged in a Chapter 7 bankruptcy are: tax debts (with some exceptions), student loans (again, with some exceptions), back child support, back alimony, and fines or tickets issued by a court. Questions about whether or not a particular debt is dischargable should be directed to a bankruptcy attorney.
WHERE DO I START?
Prior to scheduling a consultation, it is very helpful to work on one of our questionnaires/worksheets, in order to help us understand your individual situation. Clicking below will bring up our INDIVIDUAL or BUSINESS bankruptcy worksheets, in Adobe Acrobat (R), or .pdf format:
If you do not have Adobe Acrobat (R) or Adobe Acrobat Reader (R), you can go the Adobe website to download Adobe Acrobat Reader (R) for free. Note that the “Individual” worksheet is appropriate both for single persons as well as married persons filing together.
If you are significantly in debt, and don’t know what to do, TALK TO US, and we can discuss your options. If you have questions, or would like to set up a free consult, e-mail firstname.lastname@example.org or call us at 593-2199. We’ll be happy to hear from you!
WE ARE A DEBT RELIEF AGENCY PURSUANT TO SECTION 524 OF TITLE 11 OF THE UNITED STATES CODE. WE PROVIDE LEGAL ASSISTANCE AND HELP PEOPLE FILE FOR BANKRUPTCY RELIEF UNDER THE BANKRUPTCY CODE.