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Chapter 7 is the most common form of bankruptcy. Individual debtors who are unable to meet their bills and need a fresh start can benefit from Chapter 7. It may also be used by businesses that wish to liquidate and terminate their operations. Many people think that they can no longer file for Chapter 7 Bankruptcy because bankruptcy laws changed in 2005. That is not true. Although the new law has made the process a bit more complicated, most debtors can still eliminate debts and get a fresh start through Chapter 7 Bankruptcy. In most cases you can keep your personal property. Quite often you may even keep your home or car.

Debts You May Eliminate Under Chapter 7:

With a few exceptions, Chapter 7 eliminates:

• Credit card debts
• Medical bills
• Lawsuit debts/civil judgments (including personal injury)
• Personal loans
• Some taxes
• Deficiency debts on foreclosures and repossessed vehicles

There are some debts that may not be discharged, such as student loans (unless there is undue hardship), alimony and child support, damages for personal injury to someone else resulting from DUI, criminal fines and restitution, court fees, and certain taxes.

Property You Can Keep Under Chapter 7:

With some limitations, certain items of personal property are exempt, meaning the debtor can keep them. Exempt property can include:

• Motor vehicles
• Clothing
• Household goods and furnishings
• Household appliances
• Jewelry
• Pensions, including money in 401k plans
• Equity in the debtor's home
• Tools of the debtor's trade or profession
• A portion of unpaid but earned wages
• Public benefits, including public assistance, Social Security, and unemployment compensation, accumulated in a bank account
• Damages awarded for personal injury

For more information on Chapter 7 bankruptcy, please visit our FAQ. If you would like to speak to an experienced Pennsylvania bankruptcy attorney about your financial situation, call our Philadelphia bankruptcy attorney at (215) 248-0989.