Chapter 7 of the United States Bankruptcy Code is the most common type of bankruptcy. It is used primarily by individuals who wish to free themselves of their unsecured, dischargeable debts with no repayment to the creditors (which is different than a Chapter 13 bankruptcy). Chapter 7 bankruptcy is often time referred to as a “liquidation”, “straight”, or”fresh start” bankruptcy. The name “liquidation” refers to the fact that those who file for Chapter 7 bankruptcy have to liquidate, or sell, all of their “non-exempt” assents. In most situations, debtors are allowed to keep ALL of their assets (including homes, automobiles, and other belongings) as long as they are properly protected. Only experienced bankruptcy attorneys know the best methods to protect assets under the Bankruptcy Code.
The goal of a Chapter 7 bankruptcy is to provide individuals with a new beginning by wiping out all dischargeable debts, including but not limited to, credit card bills, mortgage deficiencies, medical bills, personal loans, judgments, judicial liens, business related debts, and commercial and residential leases.
Certain debts cannot be wiped out in a chapter 7 bankruptcy. They are classified as non-dischargeable debts and include:
- Alimony, maintenance, and child support obligations;
- Student loans (except in extreme hardship cases);
- Fines, penalties, and criminal restitution;
- Most taxes;
- Secured debts (personal liability for secured debts are dischargeable, however, the secured creditor will seek to take back the secured item);
- Debts incurred after the filing of bankruptcy;
- Debts incurred as a result of intentional injury to a person or property
Chapter 7 Eligibility
To qualify for a chapter 7 bankruptcy, you must demonstrate that you have no or little disposable income. Your gross income over the past six months must also be lower than that of a similar family size in Massachusetts. These first two qualifications are not absolute and can be rebutted in a number of ways.
Please call the office for other factors that may contribute to your eligibility or ineligibility to file a chapter 7.
From the instant you file for Chapter 7 bankruptcy, the judge issues an “automatic stay”. This is an immediate order to all of your creditors notifying them that you have filed for bankruptcy and that it is illegal for them to make any further attempts to collect on the debt your owe. If your creditors continue to harass you after the automatic stay is issued, you may be able to bring a lawsuit under the Fair Debt Collections Act (FDCA).
The Chapter 7 Discharge
A discharge releases individual debtors from personal liability for most debts and prevents the creditors from taking any collection action against the debtor. A chapter 7 discharge is subject to many exceptions and it is imperative for debtors to seek competent legal counsel before filing to discuss the scope of the discharge.
Let Swanson & Moors, LLC Help You Today
If you are contemplating a chapter 7 bankruptcy, you can’t afford to pass up a free consultation about filing a chapter 7 bankruptcy with an experienced attorney. Contact Swanson & Moors, LLC today.
Swanson & Moors, LLC services all of Plymouth County, Bristol County, Norfolk County, and Barnstable County.