What Is Chapter 7 Bankruptcy?

A Chapter 7 Bankruptcy is a liquation and discharge of debts for property.  In a Chapter 7, the Bankruptcy Code allows the debtor to keep certain property and has created specific exemptions.

One of the benefits of a Chapter 7 is that a debtor may be able to discharge all of their unsecured debts while still continuing to make their house payments by reaffirmation agreement and thus keep their home.

Do I Qualify for a Chapter 7 Bankruptcy?

To qualify a debtor may be an individual, a partnership, or a corporation or other business entity. 11 U.S.C. §§ 101(41), 109(b). In addition, an individual debtor must qualify under the means test.  Also, an individual cannot file for Chapter 7 Bankruptcy unless they have  received credit counseling from an approved credit counseling agency either in an individual or group briefing within 180 days before filing,. 11 U.S.C. §§ 109, 111.

In addition to the above, an individual cannot file for Chapter 7 if they had a prior bankruptcy petition that was dismissed due to the debtor’s willful failure to appear before the court or comply with orders of the court, or the debtor voluntarily dismissed the previous case after creditors sought relief from the bankruptcy court to recover property upon which they hold liens within the past 180 days before the filing. 11 U.S.C. §§ 109(g), 362(d) and (e). While there are exceptions to the rule it is important to speak with a bankruptcy attorney who can do the research to determine if you will qualify.

How Does Chapter 7 Bankruptcy Work?

After all the necessary paperwork is filled out it is filed with the court.  The court will then assign a trustee.   Approximately 30 days after the filing there is a meeting of creditors (referred to as the 341a hearing).  At this hearing the debtor brings their driver’s license and original social security card.   If everything is in order the debtor will normally receive a discharge shortly thereafter.

A Chapter 7 Bankruptcy is different from other bankruptcy filings because the debtor usually discharges all of their debts and the debtor need not make any payments to the trustee.

The big plus of filing a Chapter 7 Bankruptcy is that the debtor receives a discharge on all dischargeable debts.  The bonus of filing a Chapter 7 Bankruptcy is that by signing a reaffirmation agreement a debtor may be able to keep certain assets such as their car or house that has a loan on it by signing the agreement and continuing to pay for the car loan or a mortgage on their home.

Who Can File For A Chapter 7 Bankruptcy?

In order to file for a Chapter 7 Bankruptcy you must make under a certain amount of money taken into consideration with the number of people in your household.  If you make more than that amount you may still qualify for a Chapter 7 Bankruptcy if you meet the means test.

By law, you cannot file a Chapter 7 for 8 years, but you are allowed to file a Chapter 13 after four years of the Chapter 7 being discharged.

How do I Start?

Before you can file for a Chapter 7 Bankruptcy you should contact an attorney to review your situation to see if you qualify.

If you are looking for an attorney that is sensible and effective then call us today for a free one time 30 minute attorney consultation at 818-435-4149.