4 FAQ About Chapter 7 Bankruptcy

When you’ve been fighting to keep your head above the financial waters, bankruptcy may be the only way out. How do you know which type is right for you? You may have heard about Chapter 7 bankruptcy, which can completely discharge certain types of debts, including credit cards. If you’re interested in learning more about this option, take a look at these frequently asked questions.

What You Should Know About Chapter 7 Bankruptcy

What is Chapter 7 Bankruptcy?

In Chapter 7 Bankruptcy, you file a petition with the Bankruptcy Court seeking to discharge your debts. This means, you’ll have a clean slate with respect to certain types of debt, and you’ll no longer receive harassing calls, emails, and letters from your creditors. While Chapter 13 bankruptcy involves paying back most debts over an extended period of time, in Chapter 7 bankruptcy, you’re no longer responsible for paying certain debts back, particularly credit card debt.

How do I know if it’s right for me?

Discharge of your debts may come at a price. In certain cases, there is a loss of non-exempt property. You should discuss with your Bankruptcy lawyer whether any of your property falls outside the traditional exemptions. Most people's property is exempt, or liened by creditors who must continue to be repaid.

What debts can and can’t be discharged?

Not all debts are dischargeable through Chapter 7 bankruptcy. While your credit card debts can be discharged, your student loan debt, back taxes, and child support payments cannot be avoided. Also, secured creditors such as mortgages and car payments must continue to be paid if you want to keep the property. If you don’t want to keep the property, the debt associated with it can be discharged, but you must surrender the property.

What do I need to do to file for Chapter 7 Bankruptcy?

To qualify for Chapter 7 bankruptcy, you must meet the “Means Test,” which sets maximum income levels for households of various sizes, and varies from state to state. If your income exceeds the maximum, you will be required to file under Chapter 13.

• If you believe Chapter 7 bankruptcy is an option for you, reach out to Thomas A. Corletta, Attorney at Law of Rochester, NY, to start putting your case together. Attorney Corletta has over 40 years of experience, and he’s often praised for his individualized, knowledgeable, and attentive approach. In addition to bankruptcy, he provides service for a wide range of practice areas, from DWIs to divorce. To learn more about his work, visit the website. You can also call (585) 546-5072 to arrange for a free consultation.