chapter 7 bankruptcy

Chapter 7 is the most common form of bankruptcy, lasting around 120 days.  In Chapter 7 cases, our clients “liquidate,” by eliminating as much debt as possible and retaining any property that is allowed to be exempted, or protected from creditors.

In exchange for relief from the debts, a bankruptcy trustee is appointed to oversee your case and report to creditors on any non-exempt property you might have, and how any proceeds from this property can be used to pay creditors.

During the Chapter 7 case, debtors receive the benefit of the bankruptcy automatic stay, which prevents creditors from taking any actions to collect a debt – like repossessing property, garnishing wages, or forcing a debtor to appear in state court to defend a lawsuit – without court permission.  Once the bankruptcy is completed, a debtor will receive an order from the bankruptcy judge discharging all debts that can be eliminated.

Debtors who have previously filed for Chapter 7 relief have to wait at least 8 years from the date of their previous filing to proceed with a new Chapter 7 case.

Why Chapter 7?

Chapter 7 cases complete in a matter of months, and because of this, they are the least expensive bankruptcies.  Most people have very little in the way of unprotected assets, because state and federal laws allow us to protect most property, especially if that property is worth less than what the item is worth.

Property that is liened – like a car, a house, or household items – can be retained by reaffirming the pre-bankruptcy debt or redeeming the property for its fair value in a lump sum.

Most people file for Chapter 7 relief after exhausting their other options:  borrowing from family, liquidating retirement accounts and other exempt assets, cutting expenses and seeking more income.  But sometimes it is too difficult to pay off accumulated debt – and the interest on the debt – without a fresh start.

Unlike debt settlement, you do not have to pay tax on debt that is cancelled or eliminated through a bankruptcy.

All Chapter 7 clients have to complete a pre-fling and a post-filing online credit counseling course and appear once at a Meeting of Creditors required by the Bankruptcy Code.  There, our clients testify under oath about the accuracy of their bankruptcy paperwork and present proof of their identification and social security number to the bankruptcy trustee.  Creditors rarely appear at these meetings.  Very few clients ever have to return for another creditor’s meeting or to appear in front of a judge or litigate their case in a courtroom.

How to Make Your Chapter 7 Case Successful and Painless

After years of assisting thousands of clients through bankruptcy, our experienced attorneys and staff know what questions to ask.  At your free consultation with one of our attorneys, you can explain your goals and provide us information about your assets, your debts, and your income and expenses.  With this information, we can recommend what chapter of bankruptcy or non-bankruptcy solution is best and what the costs would be to proceed.

By being honest about your assets and income, and providing documents in a timely fashion, the WM Law team can work with you and help make your debts go away for good.