Chapter 7 Bankruptcy is designed for people in financial difficulty who do not have the ability to pay back their existing debts (call or texted “Debtors”).
The filing of a Chapter 7 petition is designed to result in a discharge of most of the debts you list on your bankruptcy petition. A discharge is a court order that says you do not have to repay your debts, but there are some exceptions. Debts which may not be discharged in your chapter 7 case include, for example, most taxes, child support, alimony, and student loans; court-ordered fines and restitution; debts obtained through fraud or deception; and personal injury debts caused by driving while intoxicated or taking drugs. Your discharge may be denied entirely if you, for example, destroy or conceal property; destroy, conceal or falsify records; or make a false oath.
Creditors cannot come back and ask you to pay any debts which have been discharged.
Debtors are subject to a “means test” to qualify for this type of bankruptcy. If you pass the means test and file a petition for bankruptcy, your case will be assigned to a Trustee, who will review your petition and preside over your 341 Meeting of the Creditors (a short and informal hearing), at which you will testify under oath about your financial affairs.
If your income is greater than the median income allowed under the law for your state for a household of your size, the Trustee , or your creditors, have the right to file a motion requesting that the court dismiss your case under § 707(b) of the United States Bankruptcy Code. It is up to the court to decide whether the case should be dismissed.
Under Chapter 7, you may claim certain property as exempt under governing federal or state law, such as your home and car.
A Trustee may have the right to take possession of and sell the remaining property that is not exempt and use the sale proceeds to pay your creditors.