What is a Chapter 7 bankruptcy?
A Chapter 7 bankruptcy involves the collection and liquidation of non-exempt assets. The proceeds of the non-exempt assets are distributed to your unsecured creditors. Unlike, a Chapter 13 bankruptcy, creditors are paid not by your income but through the value of your non-exempt property.
What happens during a Chapter 7 bankruptcy?
A Trustee will be appointed to your bankruptcy case to administer your bankruptcy estate. The Trustee will sell any non-exempt property for the benefit of your unsecured creditors.
An automatic stay will go into effect upon filing stopping: car repossessions, garnishments, foreclosures, telephone calls, and civil actions filed by creditors attempting to receive a judgment. Secured creditors will have the opportunity to request a lift of the automatic stay.
A debtor who cooperates fully with the Trustee and is honest should receive a discharge of their eligible debts.
Visit the Chapter 7 Bankruptcy Timeline for a list of common deadlines.
What debts are NOT discharged in a Chapter 7 bankruptcy?
The following debts are not usually discharged in a Chapter 7 bankruptcy case:
- Child support and alimony (spousal maintenance) or other domestic court orders
- Student Loans
- Money, property, services, or an extension, renewal, or refinancing of credit, to the extent obtained by false pretenses, a false representation, or actual fraud
- Debts owed to a single creditor and aggregating more than $500 for luxury goods or services incurred on or within 90 days of filing
- Cash advances aggregating more than $750 obtained on or within 70 days of filing
- Personal Injury from drunk/intoxicated driving
- Criminal Fines & Restitution
- Willful and malicious injury to another or to the property of another
- Income Tax debts & certain debts owing to government entities
- Fraud/intentional torts
- Debts (not Child Support or Maintenance) to a spouse, former spouse, or child that was incurred in divorce or separation through a separation agreement, divorce decree or other order of a court
- Debts incurred to pay off non-dischargeable debt
Who can file a Chapter 7 bankruptcy?
Unfortunately, not everyone is able to file a Chapter 7 bankruptcy. To qualify for a Chapter 7 your income and expenses will be examined to determine if your income level falls below the median income level for Kansas or Missouri. Many debtors will still qualify for a Chapter 7 bankruptcy even if their gross income exceeds the median income level for Kansas or Missouri once the allowed deductions are taken into consideration. Some additional information on whether you can file a chapter 7 bankruptcy can be found at our Bankruptcy FAQ. By reviewing your current situation, the lawyers at Walden & Pfannenstiel can tell you which chapter of bankruptcy you qualify for and if your property is exempt.
Our Kansas City area bankruptcy attorneys will be able help you decide if bankruptcy is the best option for you. Call or email our office today to arrange a free bankruptcy consultation with one of our bankruptcy attorneys.