Chapter 7 Bankruptcy Lawyer – Helping Clients Move Forward
Chapter 7 of the bankruptcy code is the provision that allows qualifying individuals to seek relief from creditors, and to discharge most of their debts. For these reasons, Chapter 7 is sometimes referred to as a “liquidation”, as potentially some assets can be taken and sold (or liquidated) for the benefit of creditors.
Do I (We) Qualify?
In order to be able to qualify for Chapter 7 relief, there is what is called the “Means Test.” The Means Test looks at the debt that is owed, including the different types of debt, and determines whether a person or couple reasonably may be able to repay the debt in the near future. Under the Means Test, a person (typically with the help of an attorney) completes a complex questionnaire in which financial information must be provided. Based upon such information, a calculation is run, and a score is determined. Such score is then compared to the Means Test values to help determine whether the person or couple are then eligible for filing bankruptcy under Chapter 7.
Can Any Assets be Kept?
Yes. Under Indiana law, there are classes of assets that are exempt from creditors, such as clothing, furniture, household goods, and even vehicles that are not subject to liens (if they are worth less than a specified value). You also may be able to keep your house if you are able to continue making payments.
The exemptions that are available are complex and are typically subject to monetary limitations. When I meet with you and learn about the nature of your assets and debts, I can advise you as to what assets you might be able to keep.
Will the Bankruptcy Court Take All Non-Exempt Assets?
Not necessarily. You may have certain assets, such as clothing and household goods, that exceed the statutory limitations. In many cases, the cost to seize, store, and ultimately sell these assets will far exceed the limited proceeds that might be received. As a result, the bankruptcy court may sometimes allow people to keep more than that statutorily exempt asset amounts.
What Debts are Not Subject to Being Discharged?
When debts are “discharged” in bankruptcy, this means that they no longer exist as of the discharge date. In Indiana, and in all other states, there are certain types of debts that typically are not “dischargable;” in other words, you will still be liable for these debts even if your other debts have been discharged. These debts typically include:
- Student Loans
- Child Support Payments
- Judgments in litigation that have a basis in fraud
Once I understand your situation, I can advise you as to whether any of your debts are likely not dischargable. For some debts, such as federal taxes, it is sometimes possible to enter into repayment plans.
What About My House and Car – Will These Debts Go Away?
If another person or business has a lien on your house, vehicles, or other assets, they are said to be a “secured party.” In general, secured parties will have rights to re-take assets upon a default in payments and to sell the same, and then to credit sales proceeds against the amount that you owe. To the extent that the sale proceeds are not sufficient to cover the debt that you owe, the creditor will be considered “unsecured”, and their only remedy will be to participate with other unsecured to the extent there are assets available.
In a Chapter 7 bankruptcy, the bankruptcy stay only postpones home foreclosure for a matter of months, but this may give the debtor time to find a new place to live or obtain a mortgage modification to stop the foreclosure.
THE ABOVE DESCRIPTIONS ARE GENERAL IN NATURE, AND MAY NOT BE APPLICABLE TO YOUR CASE
Please call me to schedule an appointment if you are in need of relief from creditors. I can explain the alternatives that are available, and how bankruptcy protection may be the best for your needs. At that time I can also answer any questions that you may have about your personal situation.