Chapter 7
1. Overview
If you are in debt, Chapter 7 bankruptcy, otherwise known as a liquidation
bankruptcy, allows you to start over by giving some of your assets to
creditors. The Chapter 7 bankruptcy process is inexpensive and relatively
short—it takes 6 months or less and costs under $300. A court will decide what
assets you will be allowed to keep, and which must be sold to pay creditors.
Filing a Chapter 7 bankruptcy petition will stop most creditors from trying to
collect debts you owe. However, because it involves giving up some of your
assets, it may be in your best interest to find another way to resolve your
debts before filing Chapter 7.Chapter 7 bankruptcy is sometimes called
"liquidation" bankruptcy -- it wipes out your debts, but you might have to let
the bankruptcy court liquidate (sell) some of your property for the benefit of
your creditors.
2. What happened to credit cards debts?
In a typical bankruptcy case most, if not all, of your unsecured debt will be
canceled when your case is discharged, allowing you a financial fresh start.
Under Chapter 7 bankruptcy, however, some of your property might be sold, or
liquidated, to pay off some unsecured debts. Some property cannot be sold to
pay your unsecured debt, and usually includes your home, your car, and any
other property you have that is collateral for a loan. If you are behind in
your mortgage or car payments, your home or car may be repossessed by the
company who lent you the money to buy them, but they can’t be sold to cover
your credit card debt. Once your Chapter 7 case is discharged, though, all
remaining unsecured debts will be erased.
3. A previous Bankruptcy Filing or dismissal
Cannot re-file BK chapter 7 within eight years
*Please note that this is governed by a filing date not discharge date
Cannot re-file BK chapter 7 within six years after you filed chapter 13.
4. Non-Dischargeable Debts
• Back Child support and alimony.
• Debts other than support that arise from marital settlement agreement or divorce decree.
• Student Loans.
• Government fines, penalties, or court-ordered restitution.
• Tax Arrearages ( even in the even that you used a credit card to pay off tax arrearages).
• Court judgments for injuries or death resulting from your drunk driving
convictions.
5. Dischargeable Debts
In a Chapter 7 case, the following types of debts are dischargeable:
• Business debts
• Leases
• Judgments against
you, including car accident claims
• Deficiencies existing after vehicle repossessions
• Personal loans
• Credit card account balances
• Negligence claims
• Liabilities under guaranty agreements
6. Domicile Requirement
• 2 Yrs
May use current state’s exemptions if that state has been your “domicile” for at least two years before you file for BK.
• 91 Days < but < 2 years
If you have had your domicile in your current state for more than 91 days but less than two years, you must use the
exemptions of the state where you were domiciled for the better part of the 180 day period immediately prior to the two year preceding your filing.(See below examples)
• < 91 Days
You can either file in the state where you lived immediately before
7. If you are married and Filing Jointly
In some circumstances, a married couple filing a joint bankruptcy can double
the amount of exemptions. You may always do this under the federal exemptions,
if they are available in your state. State exemptions, however, sometimes allow
you to double the exemption amount and sometimes they don’t. You’ll need to
check your state’s exemptions carefully.
If you are in debt, Chapter 7 bankruptcy, otherwise known as a liquidation
bankruptcy, allows you to start over by giving some of your assets to
creditors. The Chapter 7 bankruptcy process is inexpensive and relatively
short—it takes 6 months or less and costs under $300. A court will decide what
assets you will be allowed to keep, and which must be sold to pay creditors.
Filing a Chapter 7 bankruptcy petition will stop most creditors from trying to
collect debts you owe. However, because it involves giving up some of your
assets, it may be in your best interest to find another way to resolve your
debts before filing Chapter 7.Chapter 7 bankruptcy is sometimes called
"liquidation" bankruptcy -- it wipes out your debts, but you might have to let
the bankruptcy court liquidate (sell) some of your property for the benefit of
your creditors.
2. What happened to credit cards debts?
In a typical bankruptcy case most, if not all, of your unsecured debt will be
canceled when your case is discharged, allowing you a financial fresh start.
Under Chapter 7 bankruptcy, however, some of your property might be sold, or
liquidated, to pay off some unsecured debts. Some property cannot be sold to
pay your unsecured debt, and usually includes your home, your car, and any
other property you have that is collateral for a loan. If you are behind in
your mortgage or car payments, your home or car may be repossessed by the
company who lent you the money to buy them, but they can’t be sold to cover
your credit card debt. Once your Chapter 7 case is discharged, though, all
remaining unsecured debts will be erased.
3. A previous Bankruptcy Filing or dismissal
Cannot re-file BK chapter 7 within eight years
*Please note that this is governed by a filing date not discharge date
Cannot re-file BK chapter 7 within six years after you filed chapter 13.
4. Non-Dischargeable Debts
• Back Child support and alimony.
• Debts other than support that arise from marital settlement agreement or divorce decree.
• Student Loans.
• Government fines, penalties, or court-ordered restitution.
• Tax Arrearages ( even in the even that you used a credit card to pay off tax arrearages).
• Court judgments for injuries or death resulting from your drunk driving
convictions.
5. Dischargeable Debts
In a Chapter 7 case, the following types of debts are dischargeable:
• Business debts
• Leases
• Judgments against
you, including car accident claims
• Deficiencies existing after vehicle repossessions
• Personal loans
• Credit card account balances
• Negligence claims
• Liabilities under guaranty agreements
6. Domicile Requirement
• 2 Yrs
May use current state’s exemptions if that state has been your “domicile” for at least two years before you file for BK.
• 91 Days < but < 2 years
If you have had your domicile in your current state for more than 91 days but less than two years, you must use the
exemptions of the state where you were domiciled for the better part of the 180 day period immediately prior to the two year preceding your filing.(See below examples)
• < 91 Days
You can either file in the state where you lived immediately before
7. If you are married and Filing Jointly
In some circumstances, a married couple filing a joint bankruptcy can double
the amount of exemptions. You may always do this under the federal exemptions,
if they are available in your state. State exemptions, however, sometimes allow
you to double the exemption amount and sometimes they don’t. You’ll need to
check your state’s exemptions carefully.