Filing Chapter 7 Bankruptcy – Lawyers in Detroit, Southfield
Chapter 7 Bankruptcy: “Liquidates” or “Wipes Out” Debt
One of the primary purposes of bankruptcy is to discharge (“wipe out”) a person’s debts to give an honest individual debtor a “fresh start.” A Chapter 7 bankruptcy case accomplishes this, because it does not involve the filing of a plan of repayment as in Chapter 13. When debts are discharged in a Chapter 7 bankruptcy they are completely “wiped out” for good.
To qualify for filing a Chapter 7 bankruptcy, a person must have little or no disposable income. If you make too much money, the Court may require you to file Chapter 13 Bankruptcy.
Chapter 7 of the Bankruptcy Code also provides for “liquidation,” which means that the debtor’s property is sold, and the proceeds are distributed to the debtor’s creditors, to satisfy debts. However, under Chapter 7, certain of the debtor’s property – such as a car and personal property – may be “exempt” and protected from being sold. Additionally, if your home has no equity (meaning the balance you owe on your mortgage or liens is greater than the home’s value), it is “safe” in Chapter 7 bankruptcy. Our experienced bankruptcy lawyers will work with you to allow you to keep your home and keep your car.
In many Chapter 7 Bankruptcy cases, the debtor often has little or no property, except what is “exempt.” So often in Chapter 7 cases, there may not even be an actual liquidation of the debtor’s assets. These cases are called “no-asset cases.” The debts are just “wiped out” – and that is the end of it!
Chapter 7 Bankrupcty is attractive to many debtors because there is no future liability for any discharged debts.
It is important to note, however, that part of the debtor’s property may already be subject to liens and mortgages that pledge the property to other creditors. To understand how your lien or your mortgage is affected by a Chapter 7 bankruptcy you should talk to an experienced bankruptcy lawyer who can look at your individual situation.
Also, although an individual Chapter 7 case usually results in a discharge of most debts, the right to a discharge is not absolute. This means that some types of debts are not “dischargable” in bankruptcy. To understand if the debts you have can be discharged, call our experienced bankruptcy lawyers for a free consultation.
Debts that can NOT be discharged in Bankruptcy are:– Lawyers in Detroit, Southfield
- Most taxes;
- Most student loans;
- Most child support obligations;
- Liens on property.
The best way to determine whether filing a Chapter 7 Bankruptcy is right for your specific personal situation is to consult with a qualified Bankruptcy attorney. Our experienced bankruptcy lawyers have helped thousands of men and women get the fresh start they deserve. They can help you, too.
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