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.
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.
NOTE: 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.
Discharges ALLOWED in a Chapter 7:
- Credit cards
- Medical bills
- Signature loans
- Payday loans
- Collection agency
- Repossession of vehicles and homes
Discharges NOT ALLOWED in a Chapter 7:
- Secured debts that the debtor wants to keep (including your house and vehicle note)
- Some taxes
- Student loans
- Child support
- Criminal restitution obligation
Property allowed to keep in a Chapter 7:
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