Chapter 7


Chapter 7

When people face financial hardship they can feel depressed, with nowhere to go.  Most people feel as though there is no light at the end of the tunnel.  Fortunately,  the founding fathers enacted laws that give people who are facing financial trouble options.  One of those options is filing a Chapter 7 bankruptcy.  All the details of a  Chapter 7 can be found in Chapter 7 of the United States Bankruptcy Code.

Chapter 7 bankruptcies move rather swiftly.  Usually, the debtor will receive their Chapter 7 discharge around 90 days after filing their petition.

How Chapter 7 Bankruptcy Works

Chapter 7 Bankruptcy is generally referred to as a “liquidation” bankruptcy.   This is because a liquidation of property occurs to pay off creditors and provide the debtor with their fresh financial start.   However, not everyone has property liquidated.   There are ways to protect property so it is not sold.  These protections are called “exemptions.”  Exemptions work as a shield to protect assets from the bankruptcy process.  In many cases, I debtor can retain all their property while filing a chapter 7.  This is one of many reasons you need to consult with an experienced bankruptcy attorney before making the decision to file.

Chapter 7 Bankruptcy Qualifications

Not everyone can file a Chapter 7 Bankruptcy.  In order to qualify for a Chapter 7 Bankruptcy the debtor must beat the “means test.”  The easiest way is to have income lower than the state median income for your household size.  Even if you are above the state median income you may still qualify.  There are various deductions that reduce your income for the purposes of the means test.   One of the things we try to do in your initial consultation is to determine if you can beat the means test.  If you can’t, not to worry, you may still qualify for a Chapter 13 Bankruptcy.

The Relief from Chapter 7

Once you file a Chapter 7 Bankruptcy you will feel immediate relief.  Your creditors will stop calling you.  Your creditors will stop harassing you.  Your creditors will stop sending you mail.  If you have a wage garnishment or lawsuit pending it will stop as well.  At the conclusion of your case you will receive a discharge of debt.  Most of your consumer debts will be discharged.  However, there are various debts that will not, like most Federal and State Taxes.  This discharge of debt gives debtors the fresh start they need.

Life After Chapter 7

Most people are afraid that bankruptcy will ruin their credit.  The reality is that, for most people, the damage to their credit score is already done.  Bankruptcy can actually raise your credit score.  If your credit score isn’t raised by the bankruptcy, it can take two years or less to get your score back into the mid-to-high 700s, provided you do all the right things.  People are also afraid they will not be able to buy a house or car for years after filing bankruptcy.  This simply isn’t true.  The fact is that bankruptcy is not as negative as it once was, especially during these hard economic times.   After filing bankruptcy your are a better credit risk because you can’t file again for several years.

Contact Us

Contact us today if you are ready for your fresh financial start!  We will schedule an appointment for you to talk to one of our experienced bankruptcy attorneys.  We will help you start down the path of financial freedom.