Email this page to a friendIn Depth Chapter 7 Bankruptcy Information
Bankruptcy Information – most common type of bankruptcy
The most common type of bankruptcy for consumers to file is termed a Chapter 7 bankruptcy. Approximately two-thirds of all bankruptcy cases are filed under Chapter 7. A Chapter 7 is known as a liquidation bankruptcy because theoretically it provides that non-exempt assets are liquidated to pay creditors and any remaining balances on unsecured debt are discharged. As a practical matter, most debtors that choose chapter 7 do not lose any of their assets because they don’t own assets in excess of exemptions. Some bankruptcy information refers to Chapter 7 as “straight” bankruptcy or a “fresh start” bankruptcy.
Bankruptcy Information – eliminate most unsecured debt
A Chapter 7 bankruptcy allows an individual to eliminate most types of unsecured debt. There are exceptions, of course, but most debt can be discharged in a chapter 7. Unsecured debt typically includes, but is not limited to, credit cards, medical bills, overdue utility bills, unsecured loans and deficiency balances from repossessions and foreclosures. The term “unsecured” means that the creditor does not have any collateral securing the debt. In other words, the elimination of any of these debts will not force the surrender of any assets.
Bankruptcy Information – secured debt
“Secured” debt, on the other hand, is debt that is secured by an asset. The most common types of “secured” debts are mortgages and car loans. As a general rule, bankruptcy information dictates that in chapter 7 if you want to keep your house or car, you must continue to make the payments. For example, you cannot eliminate a car balance and retain the vehicle. The same is true if an individual has a secured loan. When someone has a secured loan, this typically means you have either financed something through the loan, like furniture, or you put up collateral on the loan. The most common example would be when a creditor requires household goods or a car title to secure the loan. The creditor requires this to make it more plausible that they will get their funds back.
Bankruptcy Information – giving up secured items
That being said, bankruptcy information dictates that you can eliminate your obligation on secured debt if you are willing to surrender the item that is securing the loan. When you file a Chapter 7 Bankruptcy, if a house is foreclosed or a car is repossessed, the bankruptcy can discharge any deficiency balance. In other words, you can eliminate the obligation on houses, cars, etc., if you are willing to give up the item. This means you can get out of all secured debts as well, as long as you are willing to give up the secured items.
Bankruptcy Information – what cannot be discharged
There are some debts that cannot be discharged when filing a Chapter 7 Bankruptcy. These are called non-dischargeable debts. The most common examples of non-dischargeable debts include student loans, government fines, recent tax debt, domestic support obligations including child support and maintenance to a former spouse, and debts incurred through fraud. There are some exceptions that can help you with these debts, but for the most part you can expect to pay these debts back. The best way to determine if a Chapter 7 Bankruptcy will help you with this debt is to get more bankruptcy information and discuss your specific situation with an attorney.
Bankruptcy Information – budget and means testing
Another factor that must be considered in chapter 7 is the candidate’s budget. The ability to file a Chapter 7 Bankruptcy is not a given for all individuals. It is something that you need to qualify for. Bankruptcy information suggests that if someone has the means to repay creditors, the court could dismiss the chapter 7 case as an abuse of the bankruptcy process. Chapter 7 is appropriate when you do not have any money left over after paying living expenses at the end of the month with which you could use to pay creditors. Congress has included “means testing” as part of the 2005 bankruptcy reform legislation. “Means testing” is Congress’s way to try to objectively measure whether or not someone can afford to pay some of their bills back. Each state has a median income level determined by government statistics for a given family size. The “median income” is a threshold income level and is the first step in determining qualification. Median income varies from state to state. Your attorney can give you more bankruptcy information and can analyze your income and expenses to help determine whether or not your chapter 7 will be successful.
Bankruptcy Information - eligibility
There are other factors that can prevent someone from being able to file. If you have filed for bankruptcy before, you may not be eligible to file again. In addition, if you have non-exempt assets you don’t want to sell, you may not want to file for chapter 7. If you filed a chapter 7 before, you are not eligible to file another chapter 7 until it has been at least 8 years and 1 day from the date of filing the previous Chapter 7 case. If it has not been 8 years since your last filing then a Chapter 7 will not be available to you. In this situation, you should consider a Chapter 13 consolidation plan. Finally, most people are concerned that their assets will be seized when filing a bankruptcy. In most situations, these concerns are usually unwarranted because each filer has exemptions to protect their assets when filing a bankruptcy. These exemptions vary from state to state and the best way to get more bankruptcy information and determine what applies to your situation is to discuss your case and situation with a qualified attorney.
Bankruptcy Information – contact a bankruptcy lawyer
Obviously this is an overview of what and how a Chapter 7 Bankruptcy functions. The best way to get more bankruptcy information and determine if this is the best option for you is to contact Legal Helpers to discuss your particular situation and needs. Legal Helpers can be contacted at 888-743-5787.
