Chapter 7 Bankruptcy Law

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What Is Bankruptcy?

Bankruptcy is a federal court process. It is designed to help consumers and businesses eliminate debt or repay debts under the protection of the bankruptcy court. There are two categories of bankruptcy, "liquidation" or "reorganization":

What Is Chapter 7 Bankruptcy?

Chapter 7, also called "straight" bankruptcy, is a form of liquidation bankruptcy. If you have a great amount of debt compared to your income, it may be appropriate to file for Chapter 7 bankruptcy. Chapter 7 is most frequently used in the case of individuals. Under Chapter 7, most, but not all, of your debts are discharged. As an individual, you will lose some of your property (nonexempt assets). The proceeds from the sale of these assets go to your creditors. Some property can be claimed as exempt when you file for Chapter 7. Federal law provides for which types of property can be exempt, and each state has its own list.

Are All of My Debts Discharged under Chapter 7?

No, as stated above, not all of your debts are discharged under Chapter 7. In addition, certain types of debts must be paid off before others. Priority debts (those that must be repaid first) include taxes and the administrative expenses of bankruptcy. Often, the only debts that can be paid off are these priority debts. Other types of debt that remain after your bankruptcy is over include:

What Is the Process for Filing for Chapter 7?

The process takes about four to six months, with filing and administrative fees, and one trip to the courthouse. Other things that you must do include:

Finally, you can have your Chapter 7 claim dismissed as long as the dismissal will not harm your creditors.

Should I Consult an Experienced Bankruptcy Lawyer?

It may be helpful to see a lawyer who has experience with bankruptcy issues and cases. As stated earlier, the process for filing for Chapter 7 is complicated and a lawyer may best be able to help guide you through it.

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Last Modified: 02-20-2014 03:29 PM PST

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