Chapter 7 Bankruptcy – The Basics
Chapter 7 Bankruptcy is by far the most common bankruptcy filed in our country. It is popular because it is relatively quick (usually 3 ½ months from filing to conclusion), and serves to eliminate most, if not all, indebtedness (credit cards, medical bills, etc.).
In a Chapter 7, debtors are typically allowed to retain vehicles and homes, although debtors would be required to continue making payments on such obligations. Chapter 7 Bankruptcy does not offer the option of changing the terms of secured debts, such as debts on homes and vehicles.
For some people, filing Chapter 7 may not be advisable. Among reasons for avoiding Chapter 7 are: 1) a debtor may have too many assets, which would be in danger of being lost in a Chapter 7 Bankruptcy proceeding; 2) the debtor may have too much income, and thus not be eligible for Chapter 7 relief; or 3) debtor may have immediate threat of foreclosure of their home or repossession of a car, in which case Chapter 7 offers temporary, but not permanent, relief.
Consulting a competent bankruptcy attorney in connection with financial difficulties is extremely important. The bankruptcy process is complex. If it is not done correctly, a person may end up worse off than when they started!