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Chapter 7 Bankruptcy

Typically, Chapter 7 is referred to as “liquidation” because you turn over non-exempt property to the trustee assigned to your case.
The confusion lies in the fact that most property is exempt.
Exempt property means it is not subject to attachment by creditors or in a bankruptcy, which means you get to keep it. The exemptions vary by state, and you should consult an attorney to determine what property may be claimed exempt in your state. In most situations, if you wish to keep houses or cars, you simply maintain your payments as scheduled to the creditor. Chapter 7 is generally the simplest and quickest form of bankruptcy. Most people receive their discharge within 5-6 months of filing the case.

The theory in Chapter 7 is that all non-exempt assets are turned over to the trustee to be liquidated for funds to distribute to creditors. In reality, however, this only occurs if the debtor does not wish to “buy back” the property. Hence, suppose a debtor has a non-exempt widget worth $1,000 which he would like to keep. Rather than sell to someone else, the trustee is normally perfectly willing to sell back to the debtor for whatever price he could obtain from a third party. The debtor may actually get a better deal because the trustee incurs no costs of sale, and in many circumstances, payments can be spread out over a short period of time. When someone has non-exempt property that cannot be protected in a Chapter 7 bankruptcy or if someone has sufficient disposable income to pay a significant portion of their debt over time, Chapter 13 bankruptcy may provide an alternative form of debt relief.

There are certain debts you get rid of automatically just because you file a chapter 7 bankruptcy. Examples are utility bills, gas, electric telephone, water and sewer. They won’t disconnect you because you filed bankruptcy. They won’t deny you service in the future. They will give you a new account number, set your balance to zero, and charge you a small security deposit. The security deposit is usually about one month’s normal bill. That deposit is your money and you will get it back from them after a period of time of paying on time.

Other bills that you get rid of automatically include: medical bills, credit card bills, deficiency balances on vehicles, deficiency balances on homes that are subject to foreclosure, personal loans, and payday loans,

Other bills that you can get rid of but only under certain circumstances include: student loans and taxes. If you have either of those, you need to talk to us about your personal circumstances.

Finally, there are some bills you never get rid of, such as, but not limited to, alimony and child support payments.

The Link below is a Microsoft Word Document, that will help to give you some general information about what happens in a Bankruptcy case.

Bankruptcy 7&13