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Chapter 7 Bankruptcy

Helping You Gain Control of Your Finances with Chapter 7 Bankruptcy

In a bankruptcy under Chapter 7 of the United States Bankruptcy Code, a bankruptcy trustee appointed by the courts will discharge—or cancel—any qualifying debts that you have. In return, however, the trustee may also liquidate some of your real or personal property in order to distribute the proceeds to creditors. While losing some of your property may sound unappealing, at the end of a Chapter 7 bankruptcy, most people are able to start over with a clean financial slate. For this reason, Chapter 7 is the most common type of bankruptcy filed in the U.S. 

In order to qualify for Chapter 7, you must first pass a “means test,” which evaluates your monthly income and/or disposable income. An experienced bankruptcy attorney can help ensure that you do not make any mistakes on your means test forms that may disqualify you, and can help you through the entire Chapter 7 process. 

What debts can you discharge?

When your Chapter 7 bankruptcy is approved by the courts, a large amount of your debts will be discharged, meaning you will no longer have balances or payment responsibilities. While Chapter 7 bankruptcy leaves many filers with a largely clean slate as far as debts are concerned, not every type of debt is able to be discharged under Chapter 7. The following are debts that qualify for discharge under the federal bankruptcy laws:

  • Credit card balances, late fees, and overdue payments
  • Bank loans or other installment loans
  • Accounts in collections
  • Past due utility bills
  • Personal loans from family, friends, or others
  • Medical bills
  • Certain tax liabilities
  • Dishonored checks
  • Most civil court judgments, including most personal injury claims
  • Attorney’s fees for court cases (except alimony or child support cases)
  • Repossession deficiency balances
  • Past due rent or other money owed to landlords
  • Business debts
  • Social Security or veterans’ benefits overpayments

In addition to the above dischargeable debts, student loan balances may be discharged in certain, rare circumstances, though this requires a very specific showing before the court. An attorney can evaluate your entire debt picture and can advise you on which debts may be discharged under Chapter 7. 

Can you keep your property?

Though some of your property will be liquidated by the bankruptcy trustee, there are certain exemptions that allow you to keep certain types of property. Such exemptions include:

  • Your home;
  • Up to $1,000 equity in motor vehicles;
  • Up to $1,000 in personal property;
  • A certain amount of monthly wages;
  • Certain benefits, pensions, or retirement funds; and
  • Child support and alimony.

An attorney will know how to best apply these exemptions to your case so that you may retain as much property as possible. 

An Experienced Chapter 7 Bankruptcy Lawyer Can Help You

If you are considering filing for bankruptcy, it is imperative that you consult with a skilled bankruptcy attorney as soon as possible. An attorney will help you qualify for Chapter 7 bankruptcy through the means test and will work so that you may keep as much of your property as possible while regaining control over your debts. If you are facing financial difficulties, call an experienced Chapter 7 bankruptcy lawyer for help today.