Chapter 7 Bankruptcy

Chapter 7 bankruptcy is a very popular choice for both consumer bankruptcy and business bankruptcy since it is a discharge, meaning you no longer have to repay your debt. However there are restrictions and eligibility requirements, see additional chapter 7 bankruptcy information below.

Chapter 7 Bankruptcy laws can be confusing therefore I strongly recommend finding a bankruptcy attorney to help you understand the details of chapter 7 bankruptcy law and how it relates to your situation.

What is Chapter 7 Bankruptcy
Chapter 7 Bankruptcy is the most common form of consumer bankruptcy filings accounting for over 50% of bankruptcy filings. This bankruptcy is also known as a liquidation since assets are converted to money. When declaring Chapter 7all non-exempt assets are sold and the proceeds are used to pay off the creditors.

Of note is that there are debts that are exempt and rarely discharged in bankruptcy, these debts include tax debts, spousal or child support and Federal student loans. Also of significance is the ability for the debtor to retain some assets. Based on the US Government Bankruptcy Code it may be possible for a debtor to retain such things as their home and/or car if they agree to continue to make payments on them.

Chapter 7 Bankruptcy Eligibility
Not everyone is eligible for Chapter 7 Bankruptcy. If you are judged to make enough money to make some payments you may not be eligible for Chapter 7, in that case you may need to consider other bankruptcy options such as Chapter 13. Also, there are restrictions on how soon a person can apply for bankruptcy after having a bankruptcy discharged. Therefore if a person has been granted a Chapter 7 discharge or other form of bankruptcy, they will not be eligible to file again for at least 6 years.

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