Chapter 7

Chapter 7 is one of the primary forms of bankruptcy for consumers and businesses alike who cannot meet their financial obligations.  The Los Angeles Bankruptcy Firm counsels people across Southern California who are in financial stress, and assists them through the Chapter 7 bankruptcy process when it is in their best interests.

What Is Chapter 7?

A Chapter 7 proceeding is known as a straight bankruptcy because the debtor files bankruptcy and receives a discharge without having to make payments. Once debts are discharged by the bankruptcy court, the debtor is no longer responsible for paying them off.

By discharging most debt, a Chapter 7 is seen as a way to provide debtors with a fresh start.  Chapter 7 is usually appropriate for people with large amounts of unsecured debt, such as credit card debt or unpaid medical bills.  A debtor who is not eligible to file Chapter 7 may still be able to seek relief from Chapter 13.

Exempt and Non-Exempt Assets

A Chapter 7 is not always as drastic as it sounds.  In most instances, the law allows you to keep all assets from being sold.  For instance, you can exempt a certain amount of equity in your home.  Other available exemptions include a certain amount of equity in your car, tools of the trade, household goods and furnishings, and retirement funds such as pensions, IRAs, and 401(k) plans.

Non-Dischargeable Debts

Not every debt is dischargeable.  Examples of non-dischargeable debts include most student loans, child support payments, and spousal support payments.  Debts that are secured by property or other collateral are also not dischargeable if you want to keep the property.  Certain tax debt and civil judgments may or may not be dischargeable, depending upon the type of debt and whether a lien has been levied to secure the debt.

Find Out if Chapter 7 is Right for You

For professional legal advice regarding your eligibility for Chapter 7 and the options available to help you find a fresh start, contact The Los Angeles Bankruptcy Firm for a free consultation.