Chapter 7 Bankruptcy
When most people think of bankruptcy, they think of a Chapter 7 bankruptcy. Chapter 7 bankruptcy is the most common type of consumer bankruptcy in the United States. Often referred to as a “straight bankruptcy,” or liquidation bankruptcy, Chapter 7′s in most cases are far less complex than the other type of consumer bankruptcy, Chapter 13. Despite being less complex than Chapter 13 bankruptcies in most cases, Chapter 7 bankruptcies still offer a number of advantages.
The filing a Chapter 7 bankruptcy will stop wage garnishment, stop a foreclosure, and protect property from judgment creditors. Chapter 7 bankruptcies, in most instances, wipe the slate clean and give people a fresh chance to start again without the burden of significant debt.
Unlike a Chapter 13 bankruptcy, a Chapter 7 bankruptcy does not involve the filing of a plan, or repayments over a number of years.
While often referred to as a liquidation type bankruptcy, usually, most people do not lose any property at all. This is because even in a Chapter 7 bankruptcy, you are entitled to keep a significant portion of your property. Arizona has statutory exemptions which specifically identify which assets you get to keep. You are still entitled to a discharge of your debts even if the Court determines you have no assets to distribute to your creditors under a Chapter 7 bankruptcy.
Once you file for Chapter 7 Bankruptcy, creditors must cease all collection efforts. This means they must stop harassing you. Once you receive you Order of Discharge, any of your unsecured debts, such as credit cards, will be discharged. This means that those creditors can no longer collect those debts and no longer harass you for payment. Likewise, any judgments against you would be wiped off your record, thus providing you with a fresh start.
While Chapter 7 bankruptcy can give you a fresh start, it may not be appropriate for all people. Specifically, some people may not qualify for a Chapter 7 bankruptcy based upon their monthly income. Other people who own too much property that they do not wish to lose, may prefer to file a Chapter 13 bankruptcy. If you would like to learn more about Chapter 7 bankruptcy and see if you would be a good candidate for a Chapter 7, please contact our firm today.