Chapter 7 Bankruptcy
Chapter 7 is the most common of all types of Bankruptcy. In this situation, you, "the debtor", are seeking a complete discharge of all your debts. Poof, all the debt is gone. Of course, not every person or business can declare Chapter 7 Bankruptcy and sometimes its not as simple as it looks.
The three most important questions in Chapter 7 Bankruptcy are as follows:
Are you eligible?
What assets or property do you have?
What kind of debt do you have?
1. Are you eligible?
To be eligible for Chapter 7, one must fall below the medium income for your state, based on the size of your household. This number is constantly evolving as the population changes, but, roughly speaking, if you are under the annual incomes listed below (based on household size) you are eligible to file Chapter 7 Bankruptcy.
Single Earner Two Earners Three Earners Four Earners
$47,414 $59,631 $70,151 $83,614
If your annual income is over the median income listed above, then you may still be eligible for Chapter 7 or you may want to consider Chapter 13 bankruptcy. If you have more questions, contact one of our attorneys for a free consultation.
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2. What assets or property do you have?
Assets are property, money, things, stuff, or anything else of value that you own. Your assets are a major consideration in filing for Chapter 7 Bankruptcy. When you file for bankruptcy, any property that is over a certain exemption level is used to pay off your creditors. Luckily, there are many exemptions. A list of more common exemptions are listed below:
$150,000 in home equity
$4,000 in car equity
$12,500 in household goods
401(k), 403(b), and other retirement plans
And many, many more.
Note: exemptions are not available to corporations declaring chapter 7 bankruptcy.
If you have more questions about exempt property, contact one of our attorneys for a free consultation.
3. What type of debt do you have?
It is important to note that only certain types of debt are dischargable in bankruptcy. Credit card debt and most consumer debt can be discharged. This type of debt is called unsecured. Unfortunately, some debt cannot be discharged,. The more common types of debt you cannot escape include:
Mortgages and other liens not paid in the bankruptcy case
Money owed for child support, court ordered fines and taxes.
Loans obtained by providing false information to the lender.
Debts resulting for willful and malicious harm.
Personal Injury debts.
Debt incurred after you file bankruptcy