Chapter 7 bankruptcy bankruptcy is also known as a Liquidation Plan or a Fresh Start Program. You have to qualify for Chapter 7 bankruptcy, and the 2005 changes to the bankruptcy laws make that more difficult.
If someone has large amounts of credit card debt – or unsecured debt – Chapter 7 may be the right choice for you. Under Chapter 7, any non-exempt property you may have is sold to pay creditors and most remaining qualified debt is eliminated – or discharged – and your creditors are legally bound from ever trying to collect on the debt again.
Sounds Simple?
Chapter 7 bankruptcies theoretically seem simple, but there are many factors to consider before filing for bankruptcy, such as income and debt levels. To qualify for Chapter 7 bankruptcy, you must pass mandated “Means Test”. Nor is all debt discharged under Chapter 7. Secured debt like (mortgages and car loans), back or unfiled taxes, student loans, child support, alimony, and debts incurred from DUI or intentional acts like fraud are not dischargeable.
Automatic Stay Protection
Chapter 7 bankruptcy provides immediate Automatic Stay Protection until your case has been discharged. Dealing with creditor calls, collections, lawsuits, even foreclosure? Filing bankruptcy stops creditor harassment. Stops foreclosure. Stops it all. With foreclosure, the stay is temporary, but if your case – and state law – allows you to keep your home through exemptions, and your discharge allows you to continue making your mortgage payments, you can keep your home out of foreclosure.
Bankruptcy is a complicated process, and laws vary from state to state. It’s important to speak with a Washington D.C. bankruptcy lawyer to discuss your case.