What Is Chapter 7?

There are two different types of bankruptcy cases that are usually used by people who need help ending their bill problems – Chapter 7 bankruptcy and Chapter 13.  Chapter 7 bankruptcy is designed for individuals (and married couples) who can’t pay their bills.  The typical Chapter 7 client is someone whose income minus their regular average monthly expenses (not including debt payment) yields no money left over.  For people with household income above the median, Chapter 7 would be appropriate where average income over the past six months (called “current monthly income”) minus expense allowances yields an amount that falls within certain guidelines.

Under Chapter 7, a trustee takes control of all property that is not specifically exempt; you get to keep many types of property because the law lets you keep it.  In return, the court allows you to wipe out many types of debts.  Generally, Chapter 7 bankruptcy lets you wipe out debts from:

• credit cards
• store cards
• medical and dental bills
• unsecured personal loans
• certain taxes

There are other types of debts that may be able to be discharged (wiped out) in Chapter 7 bankruptcy as well.  It’s useful to realize that the vast majority of people who file Chapter 7 bankruptcy get to keep all of their personal belongings – in some states, people who file Chapter 7 may also be able to keep a home and a car.  You should always talk with an experienced bankruptcy lawyer when making a decision to file Chapter 7.

Jay S. Fleischman is a New York bankruptcy lawyer who sues bill collectors for violations of the discharge injunction and automatic stay violations.  If you live in New York and are would like a free, no-obligation case review please contact Jay Fleischman.