Most people are responsible and turn to bankruptcy only as a last resort. As a result, most lay people enter the world of bankruptcy anxious and fearful about the process. They also usually have questions … lots of questions, so here are some answers to some of the more frequently asked questions.

NOTE:  While these FAQ’s are just a guideline, it’s important to consult with an experienced Chapter 7 lawyer about the particulars of your case so you can obtain the best legal counsel for your situation.

What is bankruptcy?

Bankruptcy is a legal process for people who cannot pay their bills. It can reduce (and in some instances completely eliminate) the amount of debt owed.

What’s the difference between Chapter 7 and Chapter 13?

There are several different types of bankruptcy filings under the federal bankruptcy code. Chapter 7 is intended for those with few if any assets (in most instances, your income must be equal to or below the median state average income.) Chapter 7 is also known as Liquidation Bankruptcy, and a reputable Chapter 7 lawyer can help you assess whether you qualify for this option.

Will Chapter 7 eliminate all of my debts?

While Chapter 7 can eliminate most debts, certain ones are not subject to discharge. These include tax debts, child support and/or alimony, student loans, and some fines and criminal/civil judgments. Again, an experienced Chapter 7 lawyer can help decipher if a debt in question will qualify for discharge.

Will I be able to keep my personal property under Chapter 7?

Chapter 7 bankruptcy categorizes property as either exempt or non-exempt. In most cases, property declared to be exempt is protected from creditors (unless it has been pledged as collateral towards the debt.) Examples of usually-exempt property include your primary residence and part of its equity, your primary vehicle, retirement accounts, and any tools or equipment you use to earn a living. For a more comprehensive overview on what property is protected and what is considered non-exempt, contact a professional Chapter 7 lawyer.

For a glossary of terms please see our comprehensive Bankruptcy Glossary page.

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