Chapter 7 bankruptcy is considered liquidation or straight bankruptcy. Chapter 7 discharges or eliminates all your unsecured debts such as credit cards. There is no repayment plan, and this type of bankruptcy is shorter than the others, usually completed in three to four months. Many more debts are discharged without payments in this type of bankruptcy.
If you have more debt than income, Chapter 7 bankruptcy may be a good choice for you to cancel that debt legally.
Giving Up Non-Exempt Property
In Chapter 7 bankruptcy, you must give up non-exempt property to the trustee. The trustee will sell this property and distribute the funds to your creditors. Depending on the state you live in and file bankruptcy in, exempt property is all or some of the equity in your home, or tools you need to make a living. Most of the time people who file Chapter 7 bankruptcy don’t lose their assets.
If you do decide to give up your home, the mortgage company will take possession of your home, and you will not be responsible for any more payments.
Keeping Your Assets
If you need to keep your vehicle, and you are current with your payments, you can choose not to include the car in the bankruptcy case and continue to make the payments.
Like Chapter 13 Bankruptcy
Common to both types of personal bankruptcy is you are legally required to receive credit counseling and a debtor education course. You will also need to attend a 341 (creditor’s) meeting along with your attorney, the trustee assigned to your case and your creditors.
Once you have completed all the legal requirements for your Chapter 7 bankruptcy, the remaining debts will be discharged or eliminated giving you a fresh financial start.
When the trustee has liquidated any nonexempt assets and used the monies to pay the unsecured creditors under the terms of your plan, the bankruptcy judge will close the case, and any remaining debts will be eliminated.
If you would like to get out from under your overwhelming debt, contact a Cincinnati bankruptcy attorney to discuss if Chapter 7 is a good option for you to obtain a fresh financial start.