Chapter 7 Bankruptcy

Chapter 7 personal bankruptcy is also known as straight bankruptcy, or liquidation bankruptcy. Debtors give up certain property that they own when they go bankrupt. In this court-supervised procedure, a trustee liquidates certain assets owned by the debtor and distributes the resulting proceeds to creditors. Since there is typically little, if any, nonexempt property in most chapter 7 cases, the debtor may not actually lose anyting. These cases are called “no-asset cases.” If you have assets that you’d like to keep – and they’re not covered by exemptions – you may want to look into chapter 13 bankruptcy.

In most Chapter 7 cases, most debts are discharged approximately 90 days after filing. Debts that are discharged (i.e., go away) include credit card debts. Debts that are not discharged would include certain taxes, student loans, and child support payments. Secured debts, such as mortgages and car loans, are also not discharged. It is now more difficult to qualify for Chapter 7 bankruptcy due to the new rules implemented as a result of the 2005 Bankruptcy Reform. If your income exceeds a limit set by the government, you must file under Chapter 13.

A local bankruptcy attorney can help you understand the differences between Chapter 7 bankruptcy and Chapter 13 bankruptcy, so that you can make an educated decision about the best next step for you. Fill out the form below for a free bankruptcy case evaluation by a local attorney.