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Chapter 7 Bankruptcy

Chapter 7 Bankruptcy

Under Chapter 7 Bankruptcy, a trustee is appointed by the bankruptcy court to determine all of the non-exempt assets the debtor owns. All non-exempt assets are sold or liquidated by the trustee to pay the creditors. Priority taxes are paid first, secured debts second and finally unsecured debt. The types of non-exempt debts vary by state but generally can include a portion of the value of a home, certain tools of the trade and home furnishings, pensions, public benefits and insurance. Not all debts are considered dischargeable by filing Chapter 7 Bankruptcy. Non-dischargeable debts can include: alimony, child support, student loans and certain taxes.

Common complaints about the current bankruptcy process include the ease of filing Chapter 7 Bankruptcy which opponents contend has led to careless, reckless and irresponsible spending and extravagant purchases by consumers which has increased credit card debt. Congress answered this charge in 2005 by passing The Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), which enacted several significant changes to the U.S. Bankruptcy Code. Not the least of which was a two-part means test which determined if a filer could afford to pay 25% of their non-priority unsecured debt and if the filer's income was above their state's median income level. Failing the new "Means Test" eliminated the right of the debtor to file Chapter 7 Bankruptcy and instead required them to restructure and pay their debts by filing Chapter 13 Bankruptcy.

Debtors who qualify for Chapter 7 Bankruptcy can file a Chapter 7 Bankruptcy petition which automatically suspends certain debt collection efforts including foreclosure on "real" property, wage garnishments and filing liens. An "Automatic Stay" under Chapter 7 Bankruptcy may be lifted after 45 days or more if a creditor petitions the court to have it removed. Four to six months after filing Chapter 7 Bankruptcy the bankruptcy court generally discharges unsecured debts and the creditors are unable to continue their collection efforts.

More Help on Chapter 7 Bankruptcy

  • Automatic Stay - If a petition is filed under Chapter 7, Chapter 11 or Chapter 13 Bankruptcy Section 362(a) of the Bankruptcy Code, it initiates an automatic stay which is basically an injunction against creditors to cease any activities which advance the interest of the creditor against the debtor. - read more

  • Bankruptcy Code - The United States constitution outlined in Article I, Section 8, gave the right of Congress to establish \"uniform laws on the subject of bankruptcies.\" - read more

  • Liquidation - Chapter 7 Bankruptcy is known as a \"liquidation\" bankruptcy and creditors will be paid from the liquidation of the debtor\'s assets. - read more

  • Means Test - The means test, which is outlined in Section 707(b)(2) of the Bankruptcy Code, makes it more difficult for individuals to have their debts discharged through Chapter 7 Bankruptcy. - read more

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Chapter 7 and Chapter 13 Bankruptcy Help

The two most common consumer bankruptcies are Chapter 7 and Chapter 13, our sponsoring lawyers handle these types exclusively so you can be sure you are getting accurate legal advice when you file bankruptcy. Our Bankruptcy attorneys will fight to protect your rights and your property, fight the aggressive and annoying creditors for you, and they can help you keep your home, vehicles and other property.

A lawyer will be committed to getting you debt relief and providing you with valuable information, services and advice to get you a better financial future. There are many convenient locations to make filing bankruptcy or learning about the alternatives we offer, even easier.

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