When you can't pay bills like credit cards, medical bills,
or loans, Chapter 7 is the bankruptcy type which might allow you to be discharged of your legal obligation to pay many of
your debts and let you get a fresh start.
Chapter 7 is often appropriate when debts for houses and cars are current,
and there is no money left from your monthly paycheck to pay other bills like credit cards and signature loans. It allows
you an opportunity to get your family back on a budget covered by your earnings.
If you find yourself saying
"if only these credit cards and medical bills were not here, we'd be okay" then Chapter 7 might help you by
eliminating those general unsecured debts, and allowing you to balance your budget.
Just because you file Chapter
7, that doesn't mean you loose everything. You are allowed to keep a certain amount of property, which for many
people is everything they own. What you get to keep is called "exempt" property. Exempt property is
protected from creditors.
Houses, cars, personal property, retirement accounts -- depending on the values
and equity, many of these are protected for my clients in NC, and often can be kept through bankruptcy.
Exemptions are different from state to state, and so where you file and how long you have lived there can affect what you
get to keep.
The value of the items and the exemption laws that apply to your case will determine what you can
Some people do give up property - if it exceeds the amount protected by the law that covers the case.
If you have non-exempt (nonprotected property), it is sold, or liquidated, by the court representative (called the bankruptcy
But giving up something worth, say a fraction of what you owe in order to walk away
from a huge debt you can not repay isn't always a bad deal, especially if you don't really need that item.
Whether your property is protected or not will be explained to you during your consultation so that you can make
a decision on whether this is the type of bankruptcy that will best suit your family's needs.