chapter 7 bankruptcy

What is Chapter 7 Bankruptcy?

Chapter 7 bankruptcy is filed primarily by individuals, married couples (who meet qualification criteria) or small businesses (who cease business) to eliminate debt and achieve a “fresh start”. When a Chapter 7 bankruptcy is filed you are granted an automatic “stay” on creditor collection. This means that once a Chapter 7 bankruptcy is filed creditor collections efforts and tactics, including wage garnishment, court hearings, lawsuits, phone calls, letters and other forms of creditor harassment must stop.  If a creditor fails to stop collection efforts after being notified of the filing of a Chapter 7 bankruptcy that creditor may be subject to punishment.  Once the bankruptcy process is concluded most debts are “discharged,” which means eliminated. Individuals or married couples who receive a discharge in Chapter 7 bankruptcy are no longer legally liable for discharged debts. Creditors whose debts are discharged cannot legally collect on those debts and in fact may not make any effort to collect on a discharged debt.  A Chapter 7 bankruptcy discharge erects a barrier to any further collection efforts.  Keep in mind that there are some types of debt that cannot be discharged in bankruptcy including most student loans, most tax debt, alimony, child support, debts arising out of a divorce, court fines such as speeding tickets, debts that were a result of auto accidents involving intoxication, debts that are a result of criminal activity and debts incurred through fraud.  Secured debt, such as debt that is tied to a car, home, furniture, appliances or other collateral must be paid if you want to keep the property that is tied to the debt.

Here are some concerns that we frequently address:

Understandably, you may have questions or concerns about potential Chapter 7 bankruptcy.

This is one of the most frequently expressed concerns expressed by individuals or married couples considering Chapter 7 bankruptcy.  The facts are that most individuals or married couples who are eligible for Chapter 7 bankruptcy can keep their home, their vehicles, their furniture, their retirement accounts and their other possessions.  Every person or married couple who files Chapter 7 bankruptcy is entitled to keep property worth up to a certain amount that is set by law.  The vast majority of individuals and married couples who file Chapter 7 bankruptcy keep everything they own. It is very important to keep in mind that there are limits to the value of property you can keep in a Chapter 7 bankruptcy and not all types of personal property and other assets are protected in a Chapter 7 bankruptcy.  You must consult a knowledgeable bankruptcy attorney to learn the details of what types of assets can be protected and the limits of that protection.  In that case you may be eligible to consider a Chapter 13 bankruptcy.

The fact is that most individuals and married couples who receive a Chapter 7 bankruptcy discharge are able to re-establish their credit worthiness in a relatively short period of time.  Each individual or married couples situation is unique.  Often, what folks do after a bankruptcy is more important than the fact that a bankruptcy was filed.
In other words, there is hope.

The fact is that most individuals or married couples who qualify for and then file Chapter 7 bankruptcy do have income from working.  Although there are limits to the amount of household income an individual or married couple can earn and still qualify for Chapter 7 bankruptcy, statistically most candidates for bankruptcy do qualify for Chapter 7 bankruptcy.  Each person’s situation is different and the income test used to determine who may qualify for Chapter 7 bankruptcy should be performed by a qualified and experienced bankruptcy attorney.

If you have questions about whether Chapter 7 bankruptcy is the best option for you, the experienced bankruptcy attorneys at Kinkade & Associates would be pleased to meet with you and discuss your situation. Your FREE in-person initial consultation is with an experienced local bankruptcy attorney that concentrates in debt relief.

Kinkade & Associates practices bankruptcy law in Evansville, Gibson County, Terre Haute& Vincennes.