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 your assets, 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 state.
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 310-540-6792 or contact us today.