Chapter 7 Bankruptcy

Chapter 7 bankruptcy, called a liquidation, is commonly referred to as “straight bankruptcy.”  Generally, you would file a Chapter 7 bankruptcy if  you no longer can pay the minimum payments on your current debts, earn below the State of Georgia median income, have no assets to protect, want to stop the constant collection calls, want to stop garnishments or foreclosures, or are being sued.  Chapter 7 wipes out most of your debts, but you may have to give up some of your property (for example, a car or a house for which you can no longer afford payments) .  No repayment plan is involved.  Your debts are simply wiped out forever.  A Chapter 7 case is usually resolved about 4 months after the filing date.  After your debts have been discharged in a Chapter 7 bankruptcy, you may later volunteer to pay back your creditors if, for example, you hit the lottery jackpot or strike it rich somehow; however, under the law, you don’t owe them a dime.  Once you file a Chapter 7 bankruptcy, most of the property that you get thereafter will not become part of the bankruptcy.  However, there are exceptions to this statement.  They include your income tax refunds for certain tax years before you filed bankruptcy, divorce property awards, inheritances, and life insurance that you may become entitled to within 180 days after you filed bankruptcy.  They may also include any property that you transferred just before the bankruptcy, which the bankruptcy trustee, under his or her powers under the law, recovered as an improper transfer.  Such property can be used to pay your debts in the bankruptcy.  Note that all property that you own on the date that you file a Chapter 7 bankruptcy, that qualify as “nonexempt” property under that bankruptcy, can be seized and sold to pay off your creditors.  That said, in reality, about 96 percent of consumer bankruptcies are “no asset cases.”  Meaning that the debtor gets to keep all of the property because the property is “exempt” property (property the  law allows the debtor to keep) under the Chapter 7 bankruptcy, or the trustee decided that the value of the property was not worth the cost and trouble to recover it.

To qualify for a Chapter 7 bankruptcy, you must pass a Means Test that shows that your financial situation is such that you don’t have enough income to pay back a significant portion of your debts.  While the test is complicated, you don’t have to worry.  During your consultation with us, we can help you determine your status under the test.  However, to help us do that, we request that you come to the initial consultation with the information that we will need in order to perform the test.  Please see the WHAT TO BRING TO A CONSULTATION section of this website to help you gather the necessary information for the test.  During that consultation, we will help you determine whether Chapter 7 is the right option for your situation.

We’ve tried to anticipate the questions that you may have about bankruptcy on this website.  However, should you have any further questions after reading the information on this website, do not hesitate to contact us at (770) 962-7201.

Remember, your initial consultation is free.

We are a debt relief agency.  We help people file for bankruptcy relief under the Bankruptcy Code.