Chapter 7 is the most common consumer bankruptcy. It allows you to eliminate all of your unsecured debt, such as credit cards, medical bills, and personal loans. This type of bankruptcy takes very little time to complete usually between three to six months before all of your qualifying debt will be discharged.
Chapter 7 of the bankruptcy code is often referred to the liquidation bankruptcy. In this type of bankruptcy, your court-appointed trustee will look for any of your non-exempt assets that can be sold and the money given to your creditors.
In most consumer bankruptcies, almost all of your assets are considered exempt, so you will most likely not lose any of your assets. If you have a property that is only partially covered by the exemption laws, you can either allow the trustee to sell it and give you the exemption value in cash, or you can buy the property for the non-exempt amount on the property.
What the Trustee Sells
When the trustee is figuring out what can be sold, they will look at the equity in your property. If you owe money on a home mortgage, that money owed reduces your equity in the home. The home will not be sold if the equity is fully exempt. The trustee is also not likely to sell your home if there is only a small amount of equity in your home. The equity on the home would likely not cover the costs involved in selling the home.
Exemption laws vary by state, and you can also choose to take the federal exemptions if those will better serve you. Your lawyer will help you determine which is best for you and your unique financial situation.
If you have more questions about Chapter 7 bankruptcy and how you can eliminate your debt contact a Dayton bankruptcy attorney.