If you’re facing financial hardship, filing for bankruptcy might be the solution you need to get back on track. Should you pursue this path, one of the options available to you is Chapter 7. Below is a guide that outlines the basics of this legal process so that you can move forward with knowledge and confidence.

What You Need to Know About Chapter 7 of the Bankruptcy Code

What is Chapter 7 bankruptcy?

Chapter 7 is often referred to as the liquidation bankruptcy option. Debtors have the opportunity to pay back their creditors by selling any nonexempt assets. After these debts have been repaid, you may file to discharge any remaining and eligible debts.

What are some examples of nonexempt properties or assets?

Nonexempt assets refer to belongings that you don’t need to maintain your quality of life. Common examples of this include fine jewelry or artwork, secondary vehicles, boats, family heirlooms, secondary or vacation homes, investments, and luxury items like designer clothing.

Conversely, exempt items refer to assets you need to continue living normally. These may include your primary vehicle, equity in your home, and primary pieces of household equipment or furniture.

What types of debts can you discharge?

Certain debts like income taxes, child support payments, court judgments, and student loans are not eligible for discharge under Chapter 7 bankruptcy. Applicable debts may include medical bills, credit cards, mortgages, and personal loans.

Who is eligible for Chapter 7 bankruptcy?

Before you can file, you must determine whether you’re eligible for this type of bankruptcy. Some of these qualifications include completing a credit counseling course within the previous 180 days, not having a previous bankruptcy filing on your credit within the last eight years, and earning less than your state’s median income.

If you’re considering Chapter 7 bankruptcy, enlist the team at O’Connor, Mikita & Davidson LLC for help. With three locations throughout Cincinnati, OH, this firm offers over two decades of experience to residents in Hamilton County seeking top-quality legal counsel. Visit their website to learn more about their services, and call (513) 793-5297 to schedule a consultation.