CHAPTER 7: A Liquidation Bankruptcy

Chapter 7 is designed for debtors in financial difficulty who do not have the ability to pay their existing debts.

The purpose of filing a Chapter 7 is to obtain a discharge of your existing debts. A discharge means you no longer have a legal obligation to pay the debt. The debt in essence is “wiped-out.” The creditor cannot contact you or sue you after you receive your discharge.

Discharges ALLOWED in a Chapter 7 Bankruptcy:

  • Credit cards
  • Medical bills
  • Signature loans
  • Payday loans
  • Collection agency
  • Overdrafts
  • Repossession of vehicles and homes

Debts NOT ALLOWED in a Chapter 7 Bankruptcy:

  • Secured debts that the debtor wants to keep (including your house and vehicle note)
  • Some taxes
  • Student loans
  • Child support
  • Criminal restitution obligation

Debts are Determined by Bankruptcy Court

Bankruptcy court can determine that a debt is not discharged if a creditor can prove that a debt arose from fraud, breach of fiduciary duty, or theft, or from a willful and malicious injury. The attorney will review your list of debts to determine the eligibility of discharge.

Property Allowed to Keep in a Chapter 7 Bankruptcy

  • Keep your home
  • Car
  • Personal belongings
  • Retirement

The majority of cases we see are known as a non-asset case which means that you will not lose any of your property. The attorney will review your case and list of property to determine the exemption laws.