Chapter 7 Bankruptcy

What is a Chapter 7 Bankruptcy?

When you file for bankruptcy, you will file under either chapter 7 or chapter 13 of the U.S. Bankruptcy Code. Chapter 7 relief is designed for people who will not be able to repay their debts. Under Chapter 7, you can completely discharge and walk away from many debts, such as medical bills, credit card debt, revolving loan accounts, and most other debt that is not secured by collateral. Some debts, such as student loans, spousal or child support, and some tax obligations cannot be discharged in a chapter 7 bankruptcy.

What will happen to my property?

When you file a chapter 7 bankruptcy, a trustee takes possession of your property and liquidates it in order to pay off creditors. This does not mean that you will be left with no property. Kentucky allows you to claim certain property as exempt from this process and out of the reach of creditors. Many people who file under chapter 7 end up keeping most or all of their property and creditors with unsecured claims collect little or nothing.

Can I file under chapter 7?

Not everyone qualifies for a chapter 7 filing. Your gross household income must either be below the median income in the state of Kentucky, or else you must pass the "means test". Also, if you own substantial equity in your home, or if you have valuable property that isn't exempt, you might want to file under Chapter 13. The experienced attorneys at Whitford & Neuhauser PLLC can explain the differences between Chapter 13 and Chapter 7 and help you decide which option is right for you. Come in for a free consultation!