Chapter 7 Bankruptcy

As a Bankruptcy Attorney we want you to understand what it means to file for Chapter 7 bankruptcy. It is the most common of all the bankruptcy chapters. As a northern Kentucky Bankruptcy Attorney we want you to understand that Chapter 7 bankruptcy is designed to give people a fresh start, to give individual consumers and families a chance for a new beginning financially. Chapter 7 wipes out your “unsecured” debts, ie; it wipes out your obligation to pay some debts, like credit cards and medical bills. Filing a Chapter 7 immediately stops all harassing collection activities against you. It stops all creditors from contacting you, or suing you.

It is important for you to understand that certain types of debts cannot be wiped out by bankruptcy. Student loans, certain taxes, and some fines will survive a Chapter 7 Bankruptcy.

Chapter 7 is also known as liquidation. That is because when you file Chapter 7, the Court-appointed Trustee temporarily owns all of your property. If you own luxury items or assets unnecessary for the health and welfare of you or your immediate family members, the Trustee can liquidate or sell the property to raise money for your creditors. However, if you are properly represented by an experienced Bankruptcy attorney, you can keep most or all of your property in the majority of cases. This does vary with the facts of each case, but an experienced bankruptcy attorney can protect your property using the bankruptcy code and state exemption laws.

Chapter 7 bankruptcy is used when a person has a great deal of unsecured debts, like credit card debt and medical bills, and when they don’t earn over a certain amount or own too much property. If an individual earns more than a certain amount, as set out in the census bureau statistics, the Court may require that they file a Chapter 13 type bankruptcy (a repayment plan) rather than a Chapter 7 because the Court and Congress feel that they can afford to pay back their creditors at least a percentage of what they owe. In order to be eligible to file a Chapter 7 bankruptcy you must have an income below the median for your family size in Kentucky. That percentage will depend upon what you earn, the size of your family and the amount of nonexempt property that you own, among other factors. You can try this chapter 7 means test calculator to learn more.