Chapter 7

What is Chapter 7 Bankruptcy?

Filing a Chapter 7 bankruptcy has the primary purpose of eliminating a legal obligation on unsecured dischargeable debts. Once discharged, the debtor has no liability for discharged debts. Bankruptcy law can eliminate your legal obligation on secured debts for things like a personal residence or automobile. Debtors sometimes reaffirm debts, keeping commitments to pay some items and legally reinstating prior legal obligations.

Individuals may file for bankruptcy under Chapter 7 (“straight bankruptcy”, or liquidation). Chapter 7 bankruptcy allows you to keep certain exempt property. Each state has its exemptions and exemption limits. Items not exempted are liquidated, turned in, or reaffirmed. Chapter 7 covers debts like personal loans, medical bills, and credit card bills. Some items are not dischargeable in Chapter 7. These include student loans, alimony payments, income tax, court-ordered fines and penalties, and property taxes.

Chapter 7 allows you to get a fresh start over a period of a few months. A stay is imposed during the bankruptcy process. This stay prevents all listed creditors from contacting you or your family, and from attempting in any way to collect the debt. A discharge of debt is forever; once discharged, a debt can never be collected or attempted to be collected from you.

How Does the Means Test Work?

The means test has two components. The first part assesses the income of the debtor. Your income is compared against the median income for those in your home state. If your income is less than the median income, you qualify under this aspect of the means test. If your income is above the median income, the second part of the means test is used. This second part examines the income as it relates to necessary expenses. The excess or disposable income determines if you qualify for Chapter 7 or not.

Take Legal Action Today

If you need assistance in understanding or filing a Chapter 7 bankruptcy, contact David R. Chenelle. We have focused on handling all types of bankruptcy cases throughout Massachusetts and offer a free case assessment for prospective clients seeking solutions to overwhelming debt. Do not be afraid to ask for help. Come in to inform yourself of your options and rights under bankruptcy law.

The information on this website is for general information purposes only. Nothing on this site should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship.