Chapter 7 Bankruptcy Information

The purpose of a Chapter 7 is to discharge (wipe out) most debts and allow the debtor a “fresh start”. A person can file a Chapter 7 bankruptcy once every eight years.

In a Chapter 7 bankruptcy, if you are current on your car loan and home mortgage payments and do not have equity; you can keep both your home and car and discharge most other debts. However, some debts such as court ordered alimony; child support, all student loans; parking tickets and certain taxes cannot be discharged in a Chapter 7 bankruptcy.

There are two types of creditors in bankruptcy; secured and unsecured. A secured creditor is one who has the right to get his property back if he is not receiving payments. Examples of secured debt include: furniture, cars, major appliances, jewelry and homes. In a Chapter 7 bankruptcy, the debtor may be allowed to keep these things by reaffirming these debts for the amount owed or for a lesser amount representing the value of the security, depending on the type of security interest the creditor holds.

An unsecured creditor is one who typically does not have the right to get any property back. Examples of unsecured creditors include: credit card bills, most store charges, payday and other personal loans, back rent and utility bills. However, even if utility bills are discharged, most companies such as the phone; electric and gas companies will require security deposits to restore service. Additionally, even if a debt may otherwise be dischargeable, under some circumstances if a creditor can prove that there was fraudulant activity on your part the debt may be deemed nondischargeable. However, these types of situations are infrequent.

The fact that you filed a bankruptcy can stay on your credit history for up to 10 years. This doesn’t mean that you can’t get credit. It means that you have to re-build your credit.

Attorney’s fees in a Chapter 7 can be paid in installments in most cases based on each individual budget and are always designed to be affordable for the person's.

In a Chapter 7 bankruptcy, most debts that are not reaffirmed will be discharged. A discharge means that the debtor never has to pay these bills again.

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