What is a Chapter 7 bankruptcy?
Consumers or businesses can file a Chapter 7 bankruptcy to reduce and/or eliminate debts by liquidating some or all of the debtor’s assets. A Chapter 7 bankruptcy can last from three to sixth months. A debtor must be insolvent to be eligible to file, meaning their disposable income cannot exceed the debt servicing. Most debtors who file Chapter 7 are unemployed or working odd jobs.
When filing a Chapter 7 bankruptcy, the debtor is handing over control of his assets to the bankruptcy trustee of the court, which means the debtor no longer has any authority to enter into any binding legal agreements. Only the trustee can sign off on legal agreements in accordance with bankruptcy law and procedures. The bankruptcy trustee's job is to handle the following for each case:
Eligibility for Chapter 7. In order to file Chapter 7 bankruptcy, you must be insolvent, meaning that not all of your income is able to service your debt payments. If your disposable income is sufficient to service your debts, then most debtors will file for a Chapter 13 Bankruptcy repayment plan.
Bankruptcy doesn’t erase all debts. Bankruptcy can eliminate a lot of debts, but not all. It can eliminate medical bills, credit card debt, unsecured loans, etc. But it cannot eliminate child support, secured loans, student loans, spousal support, and most tax debts.
It is best to consult a bankruptcy attorney for advice on your specific situation. If you're looking for a bankruptcy attorney that understands the Texas foreclosure process, please contact us.
When filing a Chapter 7 bankruptcy, the debtor is handing over control of his assets to the bankruptcy trustee of the court, which means the debtor no longer has any authority to enter into any binding legal agreements. Only the trustee can sign off on legal agreements in accordance with bankruptcy law and procedures. The bankruptcy trustee's job is to handle the following for each case:
- Property liquidation. The bankruptcy trustee’s job is to sell off assets to pay back creditors. Much of your personal property is exempt (such as clothing, household furniture, and car). Unsecured debts (such as credit card debt) will likely be expunged.
- Secured debt. For the secured debt (such as a home mortgage, car loan, or any loan which collateral was pledged), the debtor has the choice of allowing the creditor to repossess the asset, continue to pay the loan based on the terms in the agreement, or pay the creditor a lump sum amount equal to the replacement value of the asset. Some types of secured debts can be eliminated in a Chapter 7 bankruptcy.
Eligibility for Chapter 7. In order to file Chapter 7 bankruptcy, you must be insolvent, meaning that not all of your income is able to service your debt payments. If your disposable income is sufficient to service your debts, then most debtors will file for a Chapter 13 Bankruptcy repayment plan.
Bankruptcy doesn’t erase all debts. Bankruptcy can eliminate a lot of debts, but not all. It can eliminate medical bills, credit card debt, unsecured loans, etc. But it cannot eliminate child support, secured loans, student loans, spousal support, and most tax debts.
It is best to consult a bankruptcy attorney for advice on your specific situation. If you're looking for a bankruptcy attorney that understands the Texas foreclosure process, please contact us.
