Chapter 7 is the most common form of bankruptcy. Individual debtors who are unable to meet their bills and need a fresh start can often benefit from Chapter 7 bankruptcy. It may also be used by businesses that wish to liquidate and terminate their operations.
Although changes to the Bankruptcy Code have made the process more complicated, most debtors can still eliminate debts through Chapter 7. In most cases, you can keep your personal property, including your car. In many instances, debtors can keep their homes.
To determine if Chapter 7 is right for your situation, your attorney will review your financial information. If Chapter 7 is appropriate, the case begins with preparation and filing of a bankruptcy petition, schedules, and associated documents. In most cases, you do not have to go to court. However, you will have to attend a short hearing held by the Chapter 7 bankruptcy trustee called a meeting of creditors. At the meeting, the trustee will review your petition and schedules and ask some questions. About three months after the meeting, you will receive a discharge of your debts signed by the judge. From the date of filing to discharge, most Chapter 7 cases take about four months.
With a few exceptions, Chapter 7 eliminates debts, including:
Chapter 7 stops collections, lawsuits, bank levies, and garnishments.
Some debts may not be discharged in bankruptcy, such as
Up to a certain limit, most items of personal property are exempt, which means that the debtor can keep them. In over 90 percent of consumer bankruptcy cases, debtors keep all of their personal property. Moreover, many debtors can keep their home, if they are current on their payments and do not have too much equity. Exempt property can include:
Chapter 7 is not the right choice in every case, and there are alternatives. Other options include Chapter 13, debt negotiation/debt settlement, mortgage foreclosure defense, and mortgage modification. If you would like to speak to an experienced Pennsylvania bankruptcy attorney about the options available to you, call Dan Mueller at (215) 248-0989 or use our contact form.