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Filing Chapter 7 Cases
Chapter 7 is the most common form of bankruptcy and was created to give people a fresh financial start.
A Chapter 7 bankruptcy filing will:
- Allow most people a clean slate from their financial burdens
- Enable you to discharge, or get rid of, most, if not all, of your unsecured consumer debt like medical bills, credit card charges, personal loans, and the like
- Usually let you retain and protect most, if not all, of your property and personal belongings, by claiming protections (“exemptions”) in the property in your bankruptcy case.
A Chapter 7 bankruptcy filing generally will NOT:
- Discharge, or wipe out, child support and alimony, student loans, some taxes, traffic/court fines and restitution obligations, which will survive the Chapter 7 bankruptcy case.
If you own personal belongings or have property or claims with equity that is above what can be protected under bankruptcy law, and you want to keep the property, then Chapter 7 may not be the best option for you and a Chapter 13 bankruptcy repayment plan (see Chapter 13 section) may be a better fit.
Eligibility to file Chapter 7 is also based on a review of your income from all sources. If your income is not enough to repay your unsecured debt, even in part, you will probably qualify to file a Chapter 7 bankruptcy. However, under bankruptcy law, if you earn more than a specified amount (based on government statistics compiled by state and size of family), your attorney will need to complete a comprehensive “means test” analysis for your case. In general, the means test result will determine if you still qualify to file a Chapter 7 case or if you should be required to pay back some or all of your debts. If some repayment appears to be required, a Chapter 13 bankruptcy plan may be the appropriate alternative.