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> Chapter 7 Bankruptcy
Chapter 7 Bankruptcy
One of the main reasons to file a Chapter 7 bankruptcy is to discharge certain debts
to give the debtor a ‘clean start’. The debtor will no longer have liability for
any discharged debts.
Chapter 7 bankruptcy can potentially eliminate most kinds of unsecured debt. Some
common examples of unsecured debts are credit card debt; medical bills; personal
loans; judgments from car accidents; and deficiency balances on repossessed vehicles.
A bankruptcy trustee will be assigned to manage the debts and assets in your case.
If there are any ‘non-exempt’ assets in the debtor’s estate, it must be turned over
to the trustee, who will auction the property and use the proceeds to pay off creditors.
‘Exempt’ property, on the other hand, is property defined by state law that you
get to retain despite the bankruptcy.
Successful discharge from Chapter 7 can leave you debt free (with the exception
of certain debts listed below), but individuals filing Chapter 7 bankruptcy should
be prepared for a potential loss of property and/or assets.
Debts that cannot be entered into Chapter 7 Bankruptcy
- Student Loans
- Unpaid or Back Taxes
- Child Support/Alimony