Chapter 7 Bankruptcy

What is it?
Chapter 7 Bankruptcy, also known as liquidation (converting assets into money) or a straight bankruptcy, is the most common form of bankruptcy filing. Chapter 7 allows one to eliminate most forms of unsecured debt, such as credit cards, medical bills, personal loans and in some specific cases taxes. Filing for bankruptcy is an opportunity for a debtor to emerge out of a financial crisis and start afresh. This type of bankruptcy filing accounts for as much as 65% of all Consumer filings. Under Chapter 7 of the Bankruptcy Code all non-exempt property of the debtor is sold and the proceeds of the same are distributed to the creditors. In most cases where Chapter 7 is brought into force the debtor has no assets to lose, therefore the fresh start takes place relatively faster.

How does Chapter 7 work?
By filing for Chapter 7 bankruptcy, you are placingyou’re your property and your debts you owe in the hands of the bankruptcy court. You cannot sell or give away any of the property you own when you file, or pay off your pre-filing debts, without the court's consent. The court exercises its control through a court-appointed person called a "bankruptcy trustee." The trustee's primary duty is to see that your creditors are paid as much as possible on what you owe them. And the more assets the trustee recovers for creditors, the more the trustee is paid.

Who Can File?
Under the new rules, the first step in figuring out whether you can file for Chapter 7 bankruptcy is to measure your current monthly income against the median income for a family of your size in your state. Your "current monthly income" is your average income over the last six months before you file. If your income is less than or equal to the median, you can file for Chapter 7 bankruptcy. If your income is more than the median, however, you must pass the means test. The means test determines whether you have enough disposable income, after subtracting certain allowed expenses and required debt payments, to repay at least a portion of your unsecured debts over a five-year repayment period.

Who Cannot File?
Previous Bankruptcy- You cannot file for Chapter 7 bankruptcy if you obtained a discharge of your debts in a Chapter 7 bankruptcy case within the last eight years, or a Chapter 13 case within the last six years.

Previous Dismissal- You cannot file for Chapter 7 bankruptcy if a previous Chapter 7 or Chapter 13 case was dismissed within the past 180 days because:

• You violated a court order
• The court ruled that your filing was fraudulent or constituted an abuse of the bankruptcy system
• You requested the dismissal after a creditor asked for relief from the automatic stay

Find Relief Today-
Filing for Chapter 7 bankruptcy puts into effect an Order for Relief, known informally as the "automatic stay." The automatic stay immediately stops most creditors from trying to collect what you owe them. So, at least temporarily, creditors cannot legally garnish your wages, make harassing phone calls, empty your bank account, go after your car, house, or other property, or cut off your utility service or welfare benefits. It’s a good idea to let a bankruptcy attorney lead you through the steps of filing for Chapter 7 because the laws are often difficult to understand and the forms that are filed with the court are complicated and can be frustrating. A bankruptcy attorney will also ensure that you keep as much of your exempt property as possible by matching the key statute exemptions to your property. I understand that you may feel anxious or scared about filing bankruptcy. As your attorney, I will work hard to calm your fears and make the bankruptcy process as simple and stress-free as possible for you, while providing competent legal representation on which you can always rely.