Perhaps you are feeling overwhelmed by debt and urgently need relief. But
deciding to file for bankruptcy is a difficult decision. Before initiating
a bankruptcy, you should understand what it is. Bankruptcy is a legal
process. It is governed by federal law. However, each state may have different
laws concerning exemptions (assets you can keep.) Bankruptcy is designed
to help those who owe money find relief from their debts and also help
the people who are owed money get paid.
What is a Chapter 7 bankruptcy?
There are several types of bankruptcy. Chapter 7 is the type generally
used by individuals who need to wipe out their debts and start over. Chapter
7 is a liquidation bankruptcy. That means that a trustee collects all
sells all your assets and then pays your creditors. Under the Bankruptcy Code, individuals who
file for bankruptcy are permitted to keep certain basic assets, which
are known as "exempt property." You are allowed to keep assets
that are exempt under either federal law or the law of your
There is a "means test" qualify for Chapter 7 bankruptcy. It
takes into account your income, expenses and family size. You should consult
an attorney to determine if you qualify for this type of bankruptcy.
What happens to my debts and property?
Chapter 7 bankruptcy can
discharge most of your debts. However, some debts, such as child support, alimony,
student loans, certain taxes, and fraudulent debts,
cannot be discharged in a Chapter 7 bankruptcy. Some secured debts, such as your house or car,
can be reaffirmed. This means you will still owe the debt and must continue
to pay it. Once you have obtained a Chapter 7 bankruptcy, you cannot repeat
this type of bankruptcy filing for six years.
Chapter 7, like all forms of bankruptcy, is a complex area of the law.
At the Law Offices of James C. Shields, we are here to answer all of your
bankruptcy questions. For more information or a free consultation, call