Chapter 7 Bankruptcy

Chapter 7 bankruptcy is one of the most common types of bankruptcy. However, the Bankruptcy Abuse Prevention and Consumer Protection Act, that took affect October 17, 2005, requires many cases that once were eligible for Chapter 7 relief to be filed as Chapter 13 bankruptcies.  The new law set income limits for filing Chapter 7 bankruptcy. This will require debtors to pay back a portion of their debts through a Chapter 13 plan.  Additionally, debtors will be required to complete a course in financial management prior to getting a Chapter 7 discharge.

Chapter 7 is typically referred to as liquidation bankruptcy, but it does not require liquidation of all assets. Harris-Courage & Grady PLLC will file on your behalf a Chapter 7 bankruptcy petition in federal bankruptcy court.  This immediately stops all creditors from contacting, billing or suing you or trying to attach your wages.  Instead, your creditors will work through a trustee, with whom you must meet. The trustee will assess your income and any non-exempt assets. We will represent you at this meeting and will handle all negotiations with the trustee.

Most assets, including equity in your home and car, furniture, bank accounts and pensions up to certain caps, are exempt from creditors.  You may continue to pay your mortgage and car loans, if you choose, or you can give up any right to those assets, and the debt, too.  Certain debts, such as child support, alimony, student loans and some taxes cannot be discharged.

The federal judge will then review the petition and any objections that are filed and discharge your debts. The entire process usually takes a few months.  Once discharged, you can never again be asked to pay those debts. You start fresh, with a clean slate.