Chapter 7 Facts: Chapter 7 bankruptcy helps people get out of debt while keeping most or all of their personal belongings and other assets. It is generally the quickest and simplest chapter and is typically completed in four to six months. Unlike a Chapter 13, a chapter 7 bankruptcy does not require a repayment plan.
With the help of an experienced bankruptcy attorney filing for Chapter 7, bankruptcy relief can be a smooth process. As you explore solutions to your debt problem, it is important to understand the facts about Chapter 7 and Chapter 13 bankruptcy.
Chapter 7 Facts
- Chapter 7 is known as the “liquidation” chapter because the bankruptcy trustee can sell nonexempt assets and use the proceeds to pay back a pro-rata share to qualifying creditors.
- However, that rarely happens.
- The majority of Chapter 7 bankruptcies are “no asset” cases where the debtor (the person who files for bankruptcy protection) has no assets that are not protected by bankruptcy law.
- While you are in bankruptcy the law forbids creditors from continuing collection efforts.
- As soon as you file for bankruptcy protection all collection actions against you must stop, including collection calls, lawsuits, wage garnishments, bank levies, and even foreclosure and repossession.
- In general, if a creditor wants to move forward with a foreclosure or repossession during bankruptcy it must petition the court for permission.
- Eligibility for Chapter 7 bankruptcy includes income requirements:
- An individual or married couple automatically qualify for Chapter 7 bankruptcy if their current monthly income (based on the six months before filing) falls below the state median, adjusted for household size.
- If the debtor’s current monthly income is greater than the state median, adjusted for household size, then they must run the bankruptcy means test to determine whether they qualify for Chapter 7 bankruptcy.
- The means test is a review of your income minus allowable expenses.
- Many people who file for Chapter 7 bankruptcy earn above the median income.
- An experienced bankruptcy attorney can help you navigate through the means test.
- Eligibility for Chapter 7 bankruptcy does not include a debt limit or ceiling.
- Chapter 7 bankruptcy erases dischargeable debts.
- Dischargeable debts are debts that can be erased in bankruptcy; nondischargeable debts are debts that cannot be erased in bankruptcy.
- The most common dischargeable debts include credit cards, medical bills, personal loans, utility bills, certain older tax debts, and other types of credit or loans that were given without a collateral requirement.
Filing for Chapter 7 bankruptcy can give you a fresh financial start. It can be your chance to get your financial life in order. Once you are out from under the burdensome weight of debt, you are empowered to make wise financial decisions for your future.
We, Will, Help You Through Your Chapter 13 From Start to Finish
It is our mission to ensure that you understand the power and benefits of Chapter 7 bankruptcy. Filing for bankruptcy is a serious financial decision. If you are feeling apprehension about the process, we understand. Know that if you hire us to file your bankruptcy case, we will be by your side from start to finish. We will prepare your bankruptcy petition, file it with the court, and assist you until the end of your case.
Reach out to us by email at info@BrazielLaw.com or call (912) 351-9000.
We are a debt relief agency. We help people file for bankruptcy relief under the U.S. Bankruptcy Code.