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Chapter 7 Bankruptcy

Chapter 7 of the United States Bankruptcy Code is commonly known as a liquidating bankruptcy, personal bankruptcy, straight bankruptcy, or just bankruptcy. Chapter 7 wipes out many of your debts instantly and allows you to keep limited amounts of your property.

In most cases it stops garnishments, lawsuits, and harassment permanently. It also stops repossessions and foreclosures temporarily, but in many cases, not permanently. Chapter 7 is a good solution for medical bills, credit card debts, some old taxes, and many other unsecured debts.

Chapter 7 usually takes three to five months from the date of filing to the final discharge. You can file only once in six years.

At filing, the individual provides a list of all assets and obligations. A bankruptcy trustee goes over the list and decides whether to sell any unprotected assets to pay outstanding debts. Creditors can object on several grounds, including sudden disappearance of assets and lies in the bankruptcy filing.

If you file a chapter 7 bankruptcy, you will present a list of all assets and obligations to the bankruptcy trustee. The trustee decides whether to sell any unprotected assets to pay debts. But Chapter 7 won't make all debts go away. You will still have to repay:

  • Most student loans
  • Child support
  • Criminal fines, fees, and restitution
  • Alimony
  • Any debts incurred through fraud
  • Debts on assets that you plan to keep (like a home or a car).

Ted Machi is Board Certified* in Consumer Bankruptcy law by the Texas Board of Legal Specialization. For over thirty years, he has helped the little guy in the DFW metroplex through effective, determined, professional representation.