Chapter 7 Bankruptcy FAQ

Chapter 7 Bankruptcy FAQ from Dixon & Johnston

The law office of Dixon & Johnston Law Office proudly represents Chapter 7 bankruptcy clients in and around Belleville, IL. Our highly-experienced bankruptcy attorneys are here to help you navigate a Chapter 7. Filing for Chapter 7 bankruptcy is a complicated process, requiring an experienced lawyer. Don’t allow yourself to become overwhelmed or intimidated by legal jargon or potential implications. The bankruptcy attorneys at Dixon & Johnston Law Office are here to be your guide through the process. We receive many questions about Chapter 7 bankruptcy and will help you understand any concerns you may have. Read the answers to some of the frequently asked questions about Chapter 7 bankruptcy, and then contact us to schedule your free initial consultation.

What Is Chapter 7 and How Does it Work?

Chapter 7 bankruptcy is an element of the Bankruptcy Code. Chapter 7 provides debtors with a fresh start and is the most common form of bankruptcy. When you file for this form of relief, you must turn any nonexempt property over to a trustee, but you can protect your property with exemptions established by the state. Most people who file for Chapter 7 bankruptcy have minimal or no nonexempt property, and most people end up keeping all their property. Our attorneys will help you determine whether any of your property is at risk. If you have too much property to protect, you can opt to file a Chapter 13 bankruptcy to discharge your debts.

What Is a Chapter 7 Discharge?

When filing for Chapter 7 bankruptcy in Belleville, IL, you need an experienced attorney on your side. When a court order releases you from all your dischargeable debts, you will be issued a Chapter 7 discharge. As a result, your creditors may no longer seek to collect payment from you in most instances, regardless of the amount you owe. However, Chapter 7 bankruptcy does not always discharge the following debts:

  • Debts for certain taxes, including those due in the last three years.
  • Debts for obtaining money, services, credit, or property under false pretenses or fraud, as determined by a court following a creditors’ complaint.
  • Debts not listed on the debtor’s bankruptcy filing unless the creditor knew of the case with sufficient time to file a claim.
  • Debts for fraud, theft, or embezzlement if the creditor files a claim.
  • Debts for alimony, maintenance, support, or certain other divorce-related debts.
  • Debts for intentional or malicious injury if a creditor files a complaint.
  • Debts for certain penalties or fines.
  • Debts for student loans.
  • Debts for personal injury or death caused by the debtor’s operation of a motor vehicle while intoxicated.
  • Debts that were or could have been listed in a previous bankruptcy case in which the debtor did not receive a discharge.

What Debts Are Not Released by a Chapter 7 Discharge?

Many debts are released by a Chapter 7 discharge. When filing for Chapter 7 bankruptcy, it’s critical to understand which debts will be discharged and which you will still be responsible for. Our Chapter 7 bankruptcy attorneys will review your situation and go over each of your debts and whether or not they will be released by a Chapter 7 discharge.

Who Is Eligible for a Chapter 7 Discharge?

If you are not eligible to file Chapter 7, you still may be able to discharge your debts in a Chapter 13.  Those situations may include:

  • Those who have been granted a Chapter 7 discharge in a case within the last eight years.
  • Those who have been given a Chapter 13 discharge in a case within the previous six years unless certain conditions are met.
  • Those who conceal, destroy, or transfer property in an attempt to defraud their trustee or creditors.
  • Those who conceal, falsify, or destroy financial records.
  • Those who make false claims or withhold recorded information from the trustee in their Chapter 7 bankruptcy case.
  • Those who do not satisfactorily explain losses or deficiencies of their assets.
  • Those who refuse to respond to questions or obey orders presented by the bankruptcy court.

I’ve Heard It’s Harder to Qualify for Chapter 7 Bankruptcy Now. Is This True?

When filing for Chapter 7, your household income must be low enough to qualify. If your household income is below the state’s median income for similar households, you presumptively qualify for Chapter 7. Our attorneys are here to help you understand the process and which option is best for you.

Will All of My Debts Be Wiped out in Chapter 7 Bankruptcy?

Chapter 7 bankruptcy wipes away most types of debt. Unsecured debts are defined as debts not guaranteed by collateral property. A mortgage and an auto loan are both considered types of secured debts. Secured debts can also be discharged in bankruptcy, but if you want to keep the collateral you can sign a reaffirmation agreement and remain liable for the debt. Examples of unsecured debts wiped out by Chapter 7 bankruptcy include medical bills and credit card debt. Certain debts such as child and spousal support and student loans are not dischargeable.

In What Way Is a Chapter 13 Bankruptcy Different Than a Chapter 7 Bankruptcy?

Chapter 7 is a regular bankruptcy that usually takes less than 6 months to complete. Chapter 13 involves a payment plan of 36 to 60 months.

If I’m Current on My Mortgage, Can I Keep My Home in a Chapter 7 Bankruptcy?

If all of your equity in your house is exempt, you will be able to keep it in Chapter 7 bankruptcy. Our attorneys will explain the homestead exemption to you. Your home will remain yours as long as you stay current on your mortgage.

Will I Lose All of My Property if I File Under Chapter 7?

Each state allows debtors to keep a certain amount of their property. Exempt property may include vehicles, household furnishings, appliances and clothing, pensions, and more. If you have property that cannot be protected, you may want to file Chapter 13 to protect the property or pay out the trustee’s interest in the Chapter 7

Contact Our Bankruptcy Attorneys for a Free Consultation

Declaring bankruptcy can be an overwhelming decision, but you don’t have to make it alone. Our bankruptcy attorneys can walk you through the process, ensuring the best possible outcome for you. Let us help you retain your property and minimize the disruption to your life that filing bankruptcy can cause. Contact our team of knowledgeable, skilled attorneys today for a free initial consultation.