Chapter 7 Bankruptcy – Full Details
Chapter 7: This chapter of the Bankruptcy Code provides for discharge of many your debts with certain exceptions. It discharges all your unsecured debts including such things as credit card debt, medical bills, and claims under many lawsuits against you and in some cases even unsecured income taxes. It does not discharge taxes that are under three years old. Nor does it allow you to discharge any domestic support obligation or child support. Nor can you discharge criminal court fines or restitution.
There are also a series of debts that someone can object to discharge based upon theft, fraud, or misuse of funds as a fiduciary. The Chapter 7 Bankruptcy is a "liquidation" - the sale of a debtor's nonexempt property and the distribution of the proceeds to creditors. It is also described as a Strait Bankruptcy or as a “Fresh Start” Bankruptcy. Don't let the word “liquidation” scare you. In many cases, the Debtor is able to keep all his property or the majority of his property due to exemptions.
The debtor may also either give up secured property or sign a reaffirmation telling the creditor that he will continue to pay the debt just like he had never filed bankruptcy. The reaffirmation is usually used to reaffirm a vehicle or a home mortgage. There are eligibility requirements which will be discussed at any consultation with you.
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