Chapter 7 Bankruptcy

Chapter 7 is the most common type of bankruptcy filed by individual debtors. The primary purpose of Chapter 7 is to seek a discharge from debts. The goal of a Chapter 7 Bankruptcy case is to solve your debt problems, and provide a fresh start.

Many debts such as credit cards, personal loans, and old utility bills can be discharged. There are special rules for determining whether certain types of debts, such as taxes, and student loans can be discharged. Some debts can not be discharged in a Chapter 7 Bankruptcy, such as Child Support, Alimony, Criminal Restitution, and debts obtained by fraud (among others).

The Bankruptcy Code allows many things to be exempted, which allows the debtor to keep that property. Most exemptions have dollar limits on them, allowing a property up to a specified value to be exempted. Pennsylvania Bankruptcy Exemptions Any property which is not exempt can be taken by the trustee, and sold for the benefit of creditors. Before filing bankruptcy, you should tell your lawyer about all of your property, and be advised about what you will be allowed to exempt. A careful bankruptcy attorney will review the situation before a petition is filed.

Although the personal obligation to pay can be discharged, a secured creditor (who holds a mortgage, or lien on a car or other property), will still have the right to repossess or foreclose if the debt is not paid. Many persons who file a Chapter 7 Bankruptcy choose to continue paying these debts (reaffirm), and can then keep the property. This is a decision which you should discuss with your Bankruptcy Attorney.

There are advantages and disadvantages of filing a Chapter 7 Bankruptcy. The greatest advantage is that you get a fresh start financially, and will end up free of debt – with the exception of any loans that you have chosen to reaffirm, and a few types of debts that cannot be discharged. People who are considering bankruptcy should know that the filing will be reported on your credit report, for up to ten years. It may still be possible to obtain credit after bankruptcy. You should also be aware that you cannot file another Chapter 7 for eight years.

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