Chapter 7 Bankruptcy
Chapter 7 bankruptcy is a legal bankruptcy option designed to quickly clear your debt related to credit cards, medical bills or personal loans.
If you don’t have the income to pay these bills, this may be a safe, protected way to get a fresh financial start.
For a free Chapter 7 case evaluation with a bankruptcy lawyer near you , complete the free form on this page and we’ll connect you right away.
How Chapter 7 Bankruptcy Legally Works
Chapter 7 is one of the two main types of personal bankruptcy outlined in U.S. Bankruptcy Code, which is part of federal and state law.
Chapter 7 differs slightly from Chapter 13 bankruptcy, although both have the same goal: Clearing your debt and giving you back control of your finances.
Chapter 7 bankruptcy is typically a good fit for people with little regular income who are struggling with debt related to:
- Credit cards
- Medical bills
- Utility bills
- Personal loans
- Payday loans
These are all known as “unsecured debts” because they aren’t tied to a specific piece of property like a house or car. For your filing, all of your debt related to these may be combined and then completely cleared.
In most cases, this will only take a few months, during which you’ll likely be protected by the automatic stay, which may stop wage garnishment, creditor phone calls and other types of collection.
You won’t be required to make payments to a settlement firm. Because Chapter 7 is part of the court system, all of your fees will be set and they won’t be higher if you have more debt.
In almost every case there won’t be a property sale either, because you will likely be protected by Chapter 7 bankruptcy exemptions.
These exemptions are part of the bankruptcy laws in your state, and outline the types and values of things like homes, cars and household items which are completely protected when you file Chapter 7.
Keep in mind, your bankruptcy lawyer can go over the exemptions in your state and help you ensure all of your property is fully protected.
To take advantage of this powerful debt elimination tool you will need to first meet the Chapter 7 bankruptcy requirements.
Can You File Chapter 7 Bankruptcy?
Chapter 7 bankruptcy is so good at clearing debt that the courts put in place a set of requirements to prevent people from abusing it.
The requirements are known as the Chapter 7 means test, and if you’re in serious need of debt relief it shouldn’t keep you from filing.
The means test is a measure of your debts, income and assets – not a multiple choice pop quiz.
A good rule of thumb is to compare your income with the median income in your state. If your annual earnings are at or below the median you will most likely be eligible to file Chapter 7.
More Questions? Check out our Legal Bankruptcy FAQ section.
Your bankruptcy lawyer can help you with this test so you don’t waste time going down the wrong path.
Once your eligibility has been established, you’ll still need to take a credit counseling course, which is required before you may file any type of bankruptcy. Again, your lawyer may help you with this part.
After that, you should be ready to continue with the bankruptcy filing process, and you could be debt free in only a few months.
Chapter 7 is designed to work quickly, and relieve the burden of intense credit card and medical debt. Once resolved, you may get a fresh start that lets you go back to living your life.
Start the process today with a free case evaluation with a local Chapter 7 bankruptcy lawyer. Simply complete the free form on this page, and we’ll connect you right away.