Chapter 7

Bankruptcy Law

A Chapter 7 bankruptcy is a liquidation plan. While not all debts can be discharged (including, among others: tax liens, student loans, child support, and other domestic support obligations), many debts can be. 

Under a Chapter 7 bankruptcy, a court-appointed trustee determines if there is any non-exempt property in order to pay off as many creditors as possible.

While creditors have the right to object to a discharge in court, once a debt has been discharged under Chapter 7, the individual no longer carries any liability for that debt. Chapter 7 bankruptcy is meant to offer an individual a fresh start by discharging as many debts as possible.

Bankruptcy Law

Who’s Eligible to File for Chapter 7 Bankruptcy?

If an individual’s income is higher than their state's median income, they may be subject to a "means test." This test is meant to ensure no abuse of the protections offered under a Chapter 7 bankruptcy. It’s critical that individuals obtain the representation of an experienced, quality bankruptcy attorney to represent their interests throughout a Chapter 7 action.

 

If, during the "means test", the court determines an individual is being "presumptivly abusive" their action will either be converted to a Chapter 13 bankruptcy (with the permission of the individual), or the filing for Chapter 7 will be dismissed.

How Filing for Chapter 7 Bankruptcy Helps:

Under the federal Bankruptcy Code, filing a petition for bankruptcy will "automatically stay" harassing collector calls, most wage garnishments, and the majority of other collection actions.