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What is Chapter 7 bankruptcy and how does it work?

Wayne County consumers looking for a fresh financial start have probably heard of Chapter 7 bankruptcy and may be wondering how it could help them. This blog post describes the basics of Chapter 7 and how it could help a consumer obtain debt relief.

In a successful Chapter 7 bankruptcy, a consumer enjoys immediate and complete relief from dischargeable debts. Dischargeable debts include credit card debt, other kinds of unsecured debt and medical bills. Dischargeable debts do not include child support and student loans. These debts are very difficult to eliminate through bankruptcy.

In exchange for the debt discharge, a person called the bankruptcy trustee will be appointed and placed in charge of the consumer's property. The bankruptcy trustee will gather and sell the consumer's nonexempt assets to pay back creditors.

This does not mean that a creditor who files for Chapter 7 bankruptcy will lose all their property. The Bankruptcy Code allows consumers to keep certain exempt assets. These include small personal property, some low-worth vehicles, retirement benefits and a certain amount of home equity. Only nonexempt assets will be sold off.

Once the bankruptcy is approved and the discharge happens, the consumer is no longer on the hook for the debts discharged. Creditors are prohibited from continuing collection efforts or legal action.

In order to be eligible for Chapter 7 bankruptcy, a consumer must meet the requirements of the means test. The means test takes into consideration a consumer's income and assets. If a consumer's income or assets are too great for eligibility for Chapter 7 under the means test, the consumer could still be eligible for Chapter 13 bankruptcy. A Wayne County Chapter 7 attorney can provide more information about your bankruptcy options.

Source: United States Courts, "Liquidation Under the Bankruptcy Code," accessed on May 2, 2015

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    Posted by MaryDecember 11, 2015

    "I am overwhelmed by your response to my call, even 10 years after my bankruptcy was discharged. You have more knowledge and expertise than I could have imagined. Because of you, my fears have been put to rest. For that, I'm so very grateful. Thank you many times over. "

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    Posted by ClientOctober 26, 2010

    "... I was extremely impressed with Charles' understanding of the bankruptcy laws to the extent that I felt certain that my best interests were always at the forefront. "

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    Posted by MarleneJanuary 8, 2014

    He helped me thru my 1st bankruptcy and now the second. I had no idea what to expect , but they kept me informed and answered all my questions. Mr. Schneider is the most experienced and knowledgeable lawyer I have ever met. If you have to file call this attorney first!

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