Since 1995 Mary Jo Rivero has been helping clients with Chapter 7 and Chapter 13 bankruptcy law in Hollywood Florida.
Chapter 7 bankruptcy can be filed by individuals (called a "consumer" Chapter 7 bankruptcy) or businesses (called a "business" Chapter 7 bankruptcy). A Chapter 7 bankruptcy typically lasts three to six months.
Property liquidation. In Chapter 7 bankruptcy, some of your property may be sold by the bankruptcy trustee to pay down your debt. In return, most or all of your unsecured debts (that is, debts for which collateral has not been pledged) will be erased. You get to keep any property that is classified as exempt under the state or federal laws available to you (such as your clothes, car, and household furnishings). The majority of consumer debtors who file for Chapter 7 bankruptcy are pleased to learn that all of their property is exempt.
Secured debt. If you owe money on a secured debt (for example, a car loan for which the car is pledged as collateral), you have a choice of allowing the creditor to repossess the property (surrender); continuing your payments on the property under the contract (if the lender agrees) (reaffirmation); or paying the creditor a lump sum amount equal to the current replacement value of the property (redemption).
Eligibility for Chapter 7. Not everyone can file for Chapter 7 bankruptcy. For example, if your disposable income is sufficient to fund a Chapter 13 repayment plan -- after subtracting certain allowed expenses and monthly payments for certain debts or if you own assets in excess of the allowed exemptions -- you won't be allowed to use Chapter 7 bankruptcy.
Bankruptcy doesn't work on some kinds of debts. Though bankruptcy can eliminate many kinds of debts, such as credit card debt, medical bills, and unsecured loans, there are many types of debts, including child support and spousal support obligations, most tax debts, and student loans that cannot be discharged in bankruptcy.