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Chapter 7 Bankruptcy - Is it For You?

Chapter 7 bankruptcy is a liquidation proceeding. The debtor turns over all non-exempt property to the bankruptcy trustee, who then converts it to cash for distribution to the creditors.

The debtor receives a discharge of all dischargeable debts.

To File a Chapter 7 Bankruptcy

You must reside or have a domicile, a place of business, or property in the United States or a municipality.

You must not have been granted a Chapter 7 discharge within the last 6 years or completed a Chapter 13 plan.

You must not have had a bankruptcy filing dismissed for cause within the last 180 days.

It must not be a "substantial abuse" of Chapter 7 to grant the debtor relief. Generally speaking, if after you pay the monthly expenses for necessities there is not enough money to pay the remaining monthly debts, then granting a discharge would not be an abuse of Chapter 7.

It would not be fundamentally unfair to grant the debtor relief under Chapter 7.

The Most Common Reasons for Consumer Bankruptcy Are:

Unemployment

Large medical expenses

Seriously over extended credit

Marital problems

Large unexpected expenses

First time home buyers that must file this type of bankruptcy, should consider waiting to buy a home. Or consider credit repair first, so you can proceed in buying that wonderful home. If you feel you have no choice, that is understandable. Learn what to do after bankruptcy.

Disclaimer: This information deals with consumer bankruptcy. Each state has its own bankruptcy laws, so you need to check with your state for details. The information is provided for general information purposes only and is not intended to be a legal opinion nor legal advice nor is it intended to be a complete discussion of all the issues related to the area of consumer bankruptcy. Every individual's factual situation is different and you should seek independent legal advice regarding specific information.

If you would like to leave Chapter 7 Bankruptcy and return to our Bankruptcy main page, click here.

Or return to First Time Home Buyers home page.