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Chapter 7 Bankruptcy

If you are considering filing personal bankruptcy, you are probably considering one of two types: a Chapter 7, or a Chapter 13. A Chapter 7 bankruptcy allows a debtor to discharge all or a portion of his or her unsecured debts. Under a Chapter 7 bankruptcy, a debtor can give secured property back to a creditor if the debtor can’t afford it. If a debtor can afford to keep the property, he or she can keep it by reaffirming the debt. Once that happens, payments will continue under the contract.

A Chapter 7 bankruptcy case begins when the debtor files a petition in bankruptcy court. On the petition, the debtor will list assets, liabilities, income and expenses, contracts and leases, and a statement of financial affairs. They will also file tax returns with the bankruptcy court. Once the petition is filed, most collection actions against a debtor are stopped. This means that creditors generally can’t start or continue lawsuits, wage garnishments, or phone calls or letters that demand payment. Those creditors are notified of the bankruptcy proceeding by a bankruptcy clerk.

After a Chapter 7 bankruptcy has been filed, the court will appoint a trustee who will manage your case. Between 21 and 40 days after a petition is filed, the trustee will hold a meeting with the debtor and the debtor’s creditors. At that meeting, the debtor will be asked questions about his or her finances. The debtor will also be advised about the consequences of a bankruptcy. The trustee will determine whether the bankruptcy is being obtained fraudulently. The trustee will also watch over the case to see if there are any assets that can be sold for creditors. If you have an asset that has equity, and that asset can’t be exempted under state law, the asset can be sold to pay unsecured creditors.

In most cases, a bankruptcy discharge will be granted. If it is granted, debtors are released from liability for most types of debts. However, some types of debts (child support and student loans are two common examples) can’t be discharged in bankruptcy. As part of the bankruptcy, creditors will be allowed to seize some assets.

Chapter 7 bankruptcies give people who have gotten in over their heads financially a chance to start over. Although bankruptcies can be damaging to your credit, they can be invaluable for some people. If you think Chapter 7 bankruptcy may be a viable alternative for you, contact a knowledgeable bankruptcy attorney today.


The National Consumer Law Group, A Professional Corporation is a law firm with a nationwide network of attorneys providing a broad array of legal services to individuals and businesses nationwide in the areas of Tax Relief and Bankruptcy matters.



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