Also referred to as a “Straight Bankruptcy” or “Complete Discharge of Debts”, Chapter 7 bankruptcy is the most common form of personal bankruptcy, allowing for a complete and immediate debt discharge through the liquidation of your assets. While some debts are not dischargeable in any form of bankruptcy-for example taxes, student loans, alimony and child support- Chapter 7 bankruptcy can relieve you of creditor harassment and the pressures of overwhelming debt.

The filing of a Chapter 7 case automatically stays (or stops) virtually all collection and other legal proceedings pending against the debtor. A few days after a Chapter 7 case is filed, the court mails a notice to all creditors ordering them to refrain from any further action against the debtor. Any creditor who intentionally violates the automatic stay may be held in contempt of court and may be liable to the debtor in damages. Criminal proceedings and actions to collect alimony, maintenance, or support from exempt property or property acquired by the debtor after the Chapter 7 case was filed are not affected by the automatic stay.

The principal advantage of Chapter 7 bankruptcy over Chapter 13 Bankruptcy is that you will be permanently released from all your dischargeable debts and gain a fresh financial start within months. Typically in Chapter 7 bankruptcy, the greatest portion of debt is unsecured debt, such as medical bills, credit card debts, and loans that are not backed by any tangible assets or property. These unsecured debts will be discharged, and secured debts (such as those backed by a house or car) will be subject to creditors’ claims and can be recaptured in satisfaction of amounts still due for that property.

Not all your tangible property will be subject to liquidation through Chapter 7 bankruptcy. Our bankruptcy attorneys can help you determine what property is exempt, if you will be able to prevent foreclosure on your home or repossession on your car, what you will be required to liquidate, and what the long-term consequences will be for you.
The principal advantage of Chapter 7 bankruptcy over Chapter 13 Bankruptcy is that you will be permanently released from all your dischargeable debts and gain a fresh financial start within months.

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2005 Changes in Bankruptcy Law

In 2005 the United States Bankruptcy Code was changed requiring that individuals qualify to file for Chapter 7 bankruptcy. There has been much gloom written about the new bankruptcy laws and how much more difficult it is going to be to file. It is true that there are additional requirements under the new bankruptcy laws, which might require some people to file under Chapter 13 Bankruptcy instead of Chapter 7 Bankruptcy. However, for the vast majority of filers, Chapter 7 is still available.

In order to determine whether or not you qualify to file for a Chapter 7 bankruptcy, you should first take the Means Test. If the Means Test shows that you qualify to file for a Chapter 7 Bankruptcy then it is important to know that there are other requirements. All individuals filing for Chapter 7 Bankruptcy must attend a debt counseling course within six months of filing for Chapter 7 Bankruptcy protection. In addition, you will also be required to complete a financial education course prior to discharge of your debts.