CHAPTER 7 BANKRUPTCY
Chapter 7: This is the bankruptcy most people think about when they hear the word "bankruptcy". In a Chapter 7, most unsecured debts like most credit cards, medical bills, etc..., are discharged completely, or what they call liquidated. Of course, student loans, alimony, child support, divorce obligations, and a few other types of debt are non-dischargeable in Chapter 7. Not everyone qualifies for this type of bankruptcy as there are income limitations, making it very difficult for some people to qualify for this type of bankruptcy. Also, Chapter 7 is not appropriate for all people.
A chapter 7 bankruptcy case does not involve the filing of a plan of repayment as in chapter 13. Instead, the bankruptcy trustee gathers and sells the debtor's nonexempt assets and uses the proceeds of such assets to pay holders of claims (creditors) in accordance with the provisions of the Bankruptcy Code. Part of the debtor's property may be subject to liens and mortgages that pledge the property to other creditors. In addition, the Bankruptcy Code will allow the debtor to keep certain "exempt" property; but a trustee will liquidate the debtor's remaining assets. Accordingly, potential debtors should realize that the filing of a petition under chapter 7 may result in the loss of property.
LAW OFFICE OF GERALD WILKERSON
