Chapter 7 Bankruptcy Lawyer
If you are in financial hot water, then bankruptcy may be your best bet to get your financial situation back on track. As a person filing singularly — compared to a business owner — you have two options, filing Chapter 7 or Chapter 13.
Each option has its pros and cons, and attorneys have created a beginner’s guide to the Chapter 7 bankruptcy process.
What is Chapter 7 bankruptcy?
When you file for bankruptcy, that person is admitting to the court system that they cannot pay off their past debts and in exchange, the debtor will be federally protected from the harassment of their creditors.
Chapter 7 is known as liquidation bankruptcy; you choose to eliminate all or the majority of your debts in exchange for turning in your non-exempt personal assets as a means of payment to a trustee. A trustee is a court-appointed official whose job is to take your assets, sell them, and then pay off your creditors with the resulting cash.
While each state has its own version of what it means for an asset to be non-exempt, typically it includes the following:
- Primary homes
- Vehicles, up to a specific value and amount of cars
- Reasonable household furnishings including household appliances
- Clothing, up to a certain amount
- Tools of your trade — for example, if you work in a trade you can keep all the items necessary for your work
- Public benefits such as social security, unemployment, and food aid
It can be confusing to know what will and will not be taken from you when it comes to non-exempt assets. A quick chat with lawyers will help to set the record straight for you while bringing clarity to your situation.
Debts and Chapter 7 Bankruptcy
Depending on your situation, you may not be able to discharge every single one of your debts when filing for Chapter 7. The only kinds of debts that will be wiped clean are unsecured debts such as medical bills and any miscellaneous credit card debt you have.
While the majority of your debts will be taken away when your personal property is given to the trustee, the following types of debts are not included:
- Student loans
- Alimony
- Child support
- Debt from back taxes from the past three years
- Debts for luxuries such as vacations or frivolous items
- Debts created on the basis of fraud, such as writing a fake check
Chapter 7 and your home
If you are up to date with your mortgage payments, and if the equity in your home is exempt, then you will not have to worry about your home being taken away. This is known as the homestead exemption and is meant to protect homeowners as the trustee would have no use for the home if everything inside it cannot be sold.
You don’t want to be alone when you are going through the bankruptcy process. A lawyer can help to navigate the sometimes complex world of bankruptcy lawsuits for you, so do not hesitate to contact a law firm today to schedule a consultation.