What You Can and Cannot Do With Chapter 7 Bankruptcy
When faced with high levels of debt, bankruptcy may be the right choice for you. Within bankruptcy law there are several forms of bankruptcy from which you can choose. Each offers different benefits and drawbacks, and choosing the right one depends on your unique set of circumstances. Chapter 7 bankruptcy is one of the most common types of bankruptcy debtors seek. Unlike Chapter 13, another common form of bankruptcy, Chapter 7 does not involve filing a plan of repayment. Instead, the bankruptcy trustees will gather and sell the debtor’s nonexempt assets. The proceeds of these sales will be used to pay creditors in accordance with the Bankruptcy Code. While the debtor will be forced to sell many assets, there are some assets that are considered “exempt.” This means that they cannot be liquidated and will remain in the debtor’s possession. Your car, money you have in the bank and even your home are several examples of assets that may be exempt. The point of these exempt assets is to allow the debtor to have a fresh start after bankruptcy. Even though many of your assets will be liquidated, you may still be responsible for some debts like a mortgage lien, student loans or taxes.
Do I Qualify for Chapter 7 Bankruptcy?
To qualify for Chapter 7 bankruptcy you will be required to pass a means test. Though you may file for Chapter 7 relief, a court could convert your case to Chapter 13 if you have a certain amount of disposable income. This change means that you will have to develop a plan for repaying your debts over the course of three to five years rather than discharging the debt. You may not be responsible for the full amount, but you will have to repay what the court orders.
Discharging Debt Under Chapter 7
If you do qualify for Chapter 7 bankruptcy, you will receive a discharge which releases you from personal liability for most debts. This discharge also prevents creditors from taking any collection actions against you. Chapter 7 is subject to many exceptions which can make these bankruptcies complicated and hard to navigate. It is important that those seeking bankruptcy should speak with an attorney. The Oswalt Law Group offers the help of experienced bankruptcy attorneys in Phoenix, Arizona. Our experienced and professional attorneys have gained a stellar reputation for serving clients with a hands-on approach in a variety of bankruptcy cases. If you are considering bankruptcy, call us today for a free consultation and we can help you determine the best steps for your specific financial situation.