Chapter 7 Bankruptcy – The Basics

Chapter 7 Bankruptcy – The Basics

Chapter 7 Bankruptcy is by far the most common bankruptcy filed in our country. It is popular because it is relatively quick (usually 3 ½ months from filing to conclusion), and serves to eliminate most, if not all, indebtedness (credit cards, medical bills, etc.).

In a Chapter 7, debtors are typically allowed to retain vehicles and homes, although debtors would be required to continue making payments on such obligations. Chapter 7 Bankruptcy does not offer the option of changing the terms of secured debts, such as debts on homes and vehicles.

For some people, filing Chapter 7 may not be advisable. Among reasons for avoiding Chapter 7 are: 1) a debtor may have too many assets, which would be in danger of being lost in a Chapter 7 Bankruptcy proceeding; 2) the debtor may have too much income, and thus not be eligible for Chapter 7 relief; or 3) debtor may have immediate threat of foreclosure of their home or repossession of a car, in which case Chapter 7 offers temporary, but not permanent, relief.

Consulting a competent bankruptcy attorney in connection with financial difficulties is extremely important. The bankruptcy process is complex. If it is not done correctly, a person may end up worse off than when they started!

This article is for information purposes only and is not to be considered or substituted as legal advice. The information in this article is based on North Carolina state laws in effect at the time of posting.