CHAPTER 7

Overview

A Chapter 7 bankruptcy case is a liquidation case, sometimes referred to as straight bankruptcy.  Chapter 7 is a very popular type of bankruptcy proceeding for individuals.  A Chapter 7 case may be an “asset case” or a “no-asset case”.  In an asset case, a debtor’s nonexempt assets are converted to cash and disbursed to creditors according to certain priorities under the U.S. Bankruptcy Code.  In a no-asset, none of the debtor’s assets are available to be liquidated or sold for the benefit of creditors, because they are exempt or encumbered by liens. 

One of the primary goals of filing a Chapter 7 is to obtain a discharge.  It is important to consult with an attorney before filing your Chapter 7 so that your attorney can review your case for any bars to discharge which are listed in Section 727(a) of the Code.  A common bar to discharge is when the debtor has received a bankruptcy discharge in a case filed within the past eight years and/or when the debtor has acted with the intent to hinder, delay, or defraud a creditor.  If a debtor is not barred from discharge, after the period for objection has passed, the financial management course certificate has been filed, the filing fee has been paid in full, and all required schedules and statements have been filed, the debtor receives a discharge which eliminates the debtor’s personal responsibility to pay most debts, including credit card debts, most civil judgments, personal loans and medical debt.

When filing for Chapter, be prepared to disclose the names and addresses of your creditors, the nature of each debt, information pertaining to your income, a list of your household’s monthly expenses, and information regarding your assets.

If Chapter 7 is the best option for you, you will work directly with a bankruptcy attorney to create the necessary documents and formulate the best plan of action in your case. We have the experience to assess your unique circumstances and determine the best course of action for you.

Here are a few additional aspects of Chapter 7:

• Stops collections and garnishment with the benefit of the automatic stay and the discharge under the Code, if applicable.
• Recover money that has been garnished in some situations, generally the funds garnished in the 90 days prior to filing must be greater than $600.00.
• Avoid judicial liens on your real estate when the lien is preferential and/or impairs and exemption.
• Avoid non-purchase money liens against household goods and furnishings in some situations.
• Discharge tax debt under some circumstances.

Payoff your car at “replacement value” through a process called “redemption”.