Chapter 7 is the most common form of personal bankruptcy because it takes only about four months to discharge your debts and gets you the fresh start you deserve.
The most common discharged debts include:
- Credit cards
- Medical bills
- Payday loans
- Past due federal income taxes
- Judgments filed against you in a court of law
- Old utility, cable, and cell phone bills
- Balances remaining after broken leases, foreclosures, and repossessions
The powerful “automatic stay” takes effect as soon as a bankruptcy is filed. It stops creditors from calling or sending you demand letters, stops any pending lawsuits against you, prevents enforcement of pre-existing judgments, and cuts off garnishments of bank accounts and paychecks.
You can also take advantage of the fresh start of a Chapter 7 bankruptcy to legally terminate contracts, such as mortgages, car loans, leases, and rent-to-own agreements. This can prove helpful if the item you financed is now worth less than the balance remaining on the contract. You will not have to repay the remaining balance but will most likely have to surrender the collateral.
By taking advantage of the generous federal and state bankruptcy exemptions better than 95% of our clients don’t lose any of their property to the Trustee. You can keep your house and car as long as you continue to make the payments on time.
The general rule is that only debtors whose gross income is below the median income level per household size qualify to file for Chapter 7 bankruptcy, though there are a couple of important exceptions. Determining whether you qualify to file for Chapter 7 bankruptcy is a complicated calculation that usually requires the expertise of a knowledgeable bankruptcy attorney.