Chapter 7 Bankruptcy Information
For many Americans overwhelmed by debt, Chapter 7 bankruptcy can be a powerful tool for getting you back on track. Chapter 7 is a highly preferred bankruptcy provision, and as many as 65% of all U.S. consumer bankruptcy filings are Chapter 7 cases.
What is Chapter 7 Bankruptcy?
With this type of bankruptcy, an individual petitions the court to discharge most of their remaining debts. In exchange for this discharge, the bankruptcy trustee can take any property you own that is not exempt from collection, sell it, and redistribute the proceeds to your creditors.
The debtor has the right to retain certain property that is essentially off-limits to creditors, as dictated by their state-specific bankruptcy code. Visit your state bankruptcy exemptions page to learn which assets you can keep under your state law.
Who can file for Chapter 7?
Chapter 7 is not available to everyone, and it is important to understand what specific requirements make an individual eligible to file. Under recent revisions to U.S. Bankruptcy Law, clear criteria have been implemented to determine who can stay in Chapter 7 bankruptcy, and who will alternately be forced to file Chapter 13 bankruptcy.
Chapter 7 bankruptcy is best-suited for people who:
Have very little income.
» Debtors are required to pass the means test in order to be eligible for Chapter 7 bankruptcy.
» A local bankruptcy attorney can assist you with this process, which examines your finances to identify the most appropriate course of action for you.
Have very little property.
» Because Chapter 7 bankruptcy allows for the liquidation of some of your property to pay off debt, Chapter 7 is better suited for individuals with less property to lose.
» Certain property can be protected under state law, however in general, Chapter 7 offers less protection for your property than Chapter 13 bankruptcy.
Have large unsecured debts.
» Bankruptcy works quickly to dissolve unsecured debts such as medical and credit card bills.
» Under Chapter 7 bankruptcy, some of your assets might be liquidated to pay off these debts.
» Once your case has been discharged, all remaining unsecured debts will be eliminated.
Filing for Chapter 7 bankruptcy can be a powerful tool for dealing with overwhelming debt.
Learn whether you qualify to discharge your debts through Chapter 7 - receive a free bankruptcy case evaluation from a local bankruptcy lawyer by filling out our form below:
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