CHAPTER 7 BANKRUPTCY

WHAT IS A CHAPTER 7 BANKRUPTCY

  A Chapter 7 bankruptcy is a liquidation bankruptcy. Creditors’ claims are paid from the sale of the Debtor’s non-exempt assets and not from the Debtor’s income. A Chapter 7 bankruptcy is the quickest, easiest and cheapest of the various bankruptcy alternatives, and  for that reason,  it is the most often filed. A no asset bankruptcy is very common. It means there were no assets to be sold or repurchased .

WHAT HAPPENS IN A CHAPTER 7

  When a Debtor files a Chapter 7 bankruptcy he or she (or they) must list all assets. These assets are then divided into two groups. Exempt assets, which the Debtor can keep, and non-exempt assets, which are then repurchased by the Debtor or sold by the bankruptcy trustee at a public auction. A list of the most important exempt assets is contained in the drop-down menu at the top of this page under Bankruptcy Terms. A more through discussion of exemptions and how they can be applied in a bankruptcy see Exempt Property in the drop-down menu.   

WHAT DO I DO WITH MY CAR IF I OWE MONEY ON IT

You can keep the car and continue to make the payments, or you can return the car to the lender. If you want to keep the car you will need to sign a separate agreement called a Reaffirmation Agreement. If the car is returned any unpaid balance will be discharged.    

WHAT DO I DO WITH MY HOUSE

Chapter 7 filers may keep their homes so long as they are current in their monthly mortgage payments (or if they own the home free and clear). If a filer is in arrears at the time of filing he or she (or both if joint), must choose a Chapter 13. A home with an unpaid mortgage may be surrendered to the creditor if the Debtor does not wish to keep it. The unpaid balance will be discharged in the bankruptcy process.       

WHAT DEBTS ARE ELIMINATED

 A Chapter 7 filer will receive a bankruptcy discharge eliminating all pre-petition credit card bills, hospital or medical bills, deficiency claims, or money judgments, it does not normally eliminate unpaid taxes, child support, alimony payments, or student loans. 

WHY CHOOSE A CHAPTER 7 BANKRUPTCY

  The decision regarding the type of bankruptcy to be filed is very important and should be done 

only after discussions with your attorney. Generally:   

 You should file a Chapter 7 bankruptcy if: 

  • You have no non-exempt assets that you wish to keep. 
  • You have non-exempt assets you wish to keep and you can repurchase in 12 months. 
  • You wish to keep your house or car and are current on the payments. 
  • Your household income is less than the median income for same size households. 
  • Your household income is over the median income for same size household and you can rebut a presumption of abuse.   

Certain filers may not qualify for a Chapter 7. You are not eligible for a Chapter 7 discharge if you filed and received a Chapter 7 discharge less than eight years ago. In other words, over eight years between filings. Also, Chapter 7 filers whose income exceeds the means test amounts may be required to file a Chapter 13 or face dismissal.  


To learn about Chapter 7 Bankruptcy in Lehigh Acres. What happens in a Chapter 7 Bankruptcy in Fort Myers or What is a Chapter 7 Bankruptcy in Fort Myers. Call me at Gregory N. Burns, PA (239) 334-7107, or email me at gynburns@gmail.com .