Chapter Seven Bankruptcy Information

One of the most common requests we receive in email is from consumers wanting to know the difference between Chapter 7, Chapter 13 and chapter 11 bankrupcy. First and foremost please understand that we absolutely are NOT trying to advise you on which one is best for your situation. Only you or your bankruptcy attorney can decide that.

What we have done below is provide a basic explanation of Chapter 7 to provide our site visitors with general knowledge on the process. We have no way to know which of the bankruptcy types would be best for you, if any, or how it could affect your own personal assets and since we are not attorneys, we can not answer e-mails or questions regarding this matter. If you want information on the other chapters, visit our Chapter 11 Bankruptcy and Chapter 13 Bankruptcy information pages.

So what is chapter 7 bankruptcy? This type of bankruptcy is for businesses and individuals who have little or no income leftover after paying their normal expenses each month to pay their creditors (rent/mortgage, utilities, car payments, food, clothing, etc). In a chapter 7 bankruptcy, most unsecured debts are commonly discharged. Please note the term unsecured.

While most states do not require you to be living in "poverty" to file bankruptcy online or in person, there is a limit to "normal expenses" and " little or no money leftover". While you may consider getting your nails done monthly or a month to month golf club membership a basic expense, it probably will not be a "basic expense" in the trustee's mind. Be prepared to change your lifestyle, as well as your debt in order to file a Chapter Seven bankruptcy claim.

If you have an excessive amount of money leftover after meeting your basic expenses each month, the trustee may require you to file Chapter 13 instead. A Chapter 13 would require you to pay back a portion of your unsecured debts over time.

You may also want to note that in almost all cases, student loans are NOT dischargeable in bankruptcies of any kind. You will need to see a lawyer for specifics related to your situation, but if a huge amount of student debt or back is one of the reasons you are considering bankruptcy, you may wish to re-evaluate your choice. Child support is another type of debt you usually cannot wipe away after filing for bankruptcy- along with alimony, certain types of tax debts and several more. See our page about discharging debts in bankruptcies for more information.

Also be aware that most states have a limit on what you can have in personal assets to file a chapter 7 personal bankruptcy. If you think you can keep the boat or vacation home that is paid in full while charging off all the credit card debt, you will need to think again.

Again, we must note that the above is for informational purposes only and is not intended to be used as legal advice. Click here for more information on how you can file bankruptcy or if would like to purchase do it yourself bankruptcy form software.


Related Articles:

 

+   Information for business owners who need to claim bankruptcy
+   Is chapter 13 bankruptcy the best option for you?
+   Tips for choosing a bankruptcy lawyer you feel comfortable with
+   Tips for choosing a bankruptcy lawyer you feel comfortable with
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