Chapter 7 bankruptcy is a liquidation. If a person or business files for protection under Chapter 7 of the bankruptcy code, the bankruptcy trustee may take and sell some of your property to pay back some of your debt. Property that is “exempt” under state law, however, cannot be taken and sold by a bankruptcy trustee in a Chapter 7 bankruptcy to repay unsecured creditors. Chapter 7 cases are also relatively quick, on average only taking 4 to 6 months to complete.
Chapter 7 of the bankruptcy code is generally utilized by clients who have little to no equity in assets and the majority of their debts are unsecured debts like credit cards, pay day loans, or medical bills. Secured debts are not discharged in a Chapter 7. If you have a mortgage on your home, you would not lose your home (as long as you did not have unexempt equity) but you would still be required to make timely payments if you wanted to keep it. If you have a loan on your car, you may be required to “reaffirm” the debt, or promise to make timely payments or be personally liable, if you want to keep the car. You can always surrender any property that is secured if you do not want to keep it, which would relieve you of all repayment obligations. Upon completion and discharge of your Chapter 7 bankruptcy case, most unsecured debt is wiped out (exceptions would be things like recent tax debt, back child support, or student loans).
In order to file for relief under Chapter 7 of the federal bankruptcy code, you must qualify. The main qualifier for being able to file a Chapter 7 case is income—you must make less than the median income for a family with the same number of people in your household for the state of Missouri. If you do not qualify for a Chapter 7, you would qualify for a Chapter 13 bankruptcy.
To determine which chapter you should file or if you should file at all, contact Garner Law for a free initial consultation. At Garner Law, we realize that if you are facing bankruptcy every penny counts. That is why we will beat any quoted fee to file a Chapter 7 case by $25.