Chapter 7 - Liquidation Under the Bankruptcy Code

A Chapter 7 bankruptcy allows individuals and families to stop paying many, if not most, of their debts.  You can get rid of most credit card debt, debt from repossessed vehicles, debt from former residential and apartment leases, debt from judgments, and even taxes in some cases.  And, you can do this without paying your creditors a penny!

There is no repayment of any debt in a Chapter 7 so that is the best choice for most people—if you qualify.  You have to pass a Means Test based on your income to qualify for a Chapter 7.
Here is a link to see the most current income limits for a Chapter 7  https://www.justice.gov/ust/eo/bapcpa/20200401/bci_data/median_income_table.htm.
There are also limits on your expenses that can complicate qualifying for a Chapter 7, which is why you want an experienced attorney helping you.  Chapter 7 will not help if you are behind on your current rent, mortgage or car payments.

An individual can file a Chapter 7 without the need to pass the Means Test if their debts are primarily from operating a business.
Chapter 7 bankruptcies usually take less than six months from start to finish.  Contact us now so we can discuss whether a Chapter 7 is right for you.

Practice Areas

Criminal Law
Domestic Violence
Family Law
Sexual Assault and Battery

Related Links:

Chapter 13 Bankruptcy
Chapter 11 Bankruptcy
Bankruptcy FAQs

Eligibility

To qualify for relief under chapter 7 of the Bankruptcy Code, the debtor may be an individual, a partnership, or a corporation or other business entity. 11 U.S.C. §§ 101(41), 109(b). Subject to the means test described above for individual debtors, relief is available under chapter 7 irrespective of the amount of the debtor's debts or whether the debtor is solvent or insolvent. An individual cannot file under chapter 7 or any other chapter, however, if during the preceding 180 days a prior bankruptcy petition was dismissed due to the debtor's willful failure to appear before the court or comply with orders of the court, or the debtor voluntarily dismissed the previous case after creditors sought relief from the bankruptcy court to recover property upon which they hold liens. 11 U.S.C. §§ 109(g), 362(d) and (e). In addition, no individual may be a debtor under chapter 7 or any chapter of the Bankruptcy Code unless he or she has, within 180 days before filing, received credit counseling from an approved credit counseling agency either in an individual or group briefing. 11 U.S.C. §§ 109, 111. There are exceptions in emergency situations or where the U.S. trustee (or bankruptcy administrator) has determined that there are insufficient approved agencies to provide the required counseling. If a debt management plan is developed during required credit counseling, it must be filed with the court.

One of the primary purposes of bankruptcy is to discharge certain debts to give an honest individual debtor a "fresh start." The debtor has no liability for discharged debts. In a chapter 7 case, however, a discharge is only available to individual debtors, not to partnerships or corporations. 11 U.S.C. § 727(a)(1). Although an individual chapter 7 case usually results in a discharge of debts, the right to a discharge is not absolute, and some types of debts are not discharged. Moreover, a bankruptcy discharge does not extinguish a lien on property.
Links: www.uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/chapter-7-bankruptcy-basics

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