Chapter 7 Bankruptcy – It’s Meant to Discharge (Eliminate) Debt

Written by Adam Peck Category: Nursing Homes January 23rd, 2013 3 min read

Can I File Chapter 7 Bankruptcy?

Chapter 7 bankruptcy is intended to provide relief for people who have a lot of unsecured debt and don’t have sufficient income or assets to make good on that debt.
Unlike Chapter 13 bankruptcy, Chapter 7 bankruptcy isn’t designed to help debtors catch up on past-due accounts – it’s meant to discharge (eliminate) debt.

Who Files Chapter 7 Bankruptcy?

Most people who file for Chapter 7 bankruptcy have primarily unsecured debts: debt like credit card debt, medical bills, past due utility bills, unsecured personal loans and similar debts.
People who have outstanding debt on big-ticket items like homes and cars and want to keep that property usually opt to file for Chapter 13 bankruptcy, which allows for repayment of debts over a 3-5 year period and allows the debtor to keep his property.

New Bankruptcy Law

– The new bankruptcy law that took effect in October of 2005 sought to make sure that people who could pay some or all of their debts did so.

– The law now makes anyone who wants to file Chapter 7 bankruptcy take the Chapter 7 means test.

– The means test attempts to screen debtors to find out whether or not they have the means available to pay some or all of their debts.

The First Step in Filing Chapter 7 Bankruptcy: The first step of the means test is to compare the debtor’s income to the state median income where he resides. The test ends right there for most Chapter 7 debtors–if the debtor’s income is below the median for his state, he can file under Chapter 7. However, if a debtor’s income is higher than his state’s median, it doesn’t necessarily mean that he can’t file under Chapter 7: it just means that the debtor must move on to the next step of the means test and provide additional information to determine how much disposable income he has available to pay debts. The short answer is that nearly everyone who would have filed for Chapter 7 bankruptcy before the law change can still do so.

Talk to a Chapter 7 Bankruptcy Lawyer for More Information

For specific information about your eligibility for Chapter 7 bankruptcy and to find out whether filing bankruptcy would provide the relief and protection you need, talk to a bankruptcy attorney. The decision to file for bankruptcy is difficult. There are many nuances in bankruptcy law that determine how filing for Chapter 7 bankruptcy will impact your life. An experienced bankruptcy attorney should be able to help you understand the different options available to you and advise you about the best course of action for your circumstances.

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Written by Adam Peck

Expertise: Personal Injury

Adam J. Peck, ESQ is a principal with Peck Law Group, APC. In 2008, Mr. Adam Peck received his Juris Doctorate from Whittier Law School where he graduated Cum Laude. His practice is primarily dedicated to representing Elders, Dependent Adults, along with their loved ones and family members, who have suffered horrific personal injuries.