How Chapter 7 Bankruptcy Works
A Chapter 7 case allows the Debtor to liquidate (or wipe away) most unsecured debt, such as credit card bills, lines of credit, medical expenses, old utility bills, auto deficiencies, (balances owed after repossession) and auto accident judgments resulting in suspensions of a drivers license by obtaining a discharge of the debts.
Chapter 7 Bankruptcy provides a way for debtors, both individuals and married couples to discharge some debts, bills and financial obligations. If a Chapter 7 is appropriate for you to file, you are generally able to keep some or most of, if not all of your property through:
• homestead exemptions;
• personal property exemptions;
• other exemptions;
Chapter 7 Redemptions
You may be able to keep some items that have loans against them, such as appliances furniture, automobiles and other secured items by making arrangements to continue payments. In some cases, if you have the money you can pay off the item in full for the fair market value. That is known as a redemption.
There is a meeting of creditors at which a Trustee will review the Petition. In over 98% of cases all property is exempt and kept by you In the rare event any property is not exempt it may be sold by a trustee with the money distributed to creditors. Examples of debts that cannot be discharged through Chapter 7 include:
• recent taxes;
• family support;
• student loans except for undue hardship;
• drunk driving judgments;
• criminal fines and restitutions;
• debts incurred by fraud or intentional wrongdoing;
Liquidation or Straight Bankruptcy?
These cases are designed for Debtors who generally do not have a lot of assets (property) or real estate equity (value of the property minus the debt owed on it) which is not exempt. The Bankruptcy Courts also look at your income to determine if you are eligible to file Chapter 7.
If you are behind on mortgage payments or a car loan and you wish to keep the house or the car, a Chapter 7 case probably will not be the right choice for you. While Chapter 7 can discharge the debt, it does not take away the right of the mortgage company or the auto lender to proceed with moving to take away your property if you are in arrears on the payments and cannot immediately get caught up. In such a case a Chapter 13 case may be just the solution.
Call the help of Philadelphia Chapter 7 Bankruptcy Attorney in The Law Offices of David M. Offen for your bankruptcy issues now.