Law Office of David Ruff

Chapter 7

Chapter 7 is often referred to as the liquidation bankruptcy.  It most cases, Chapter 7 allows you to eliminate your unsecured debts such as credit cards and medical bills.  However, certain unsecured debts such as taxes, child support and student loans are not dischargable in bankruptcy. 

Chapter 7 does allow the debtor to continue to pay on secured debts such as house payments and car payments.  In fact, retaining the secured debt is mandatory if the debtor wishes to retain the property securing the debt.  If the debtor is willing to "surrender" the collateral, they can eliminate the secured debt.

In most bankruptcy cases, all the assets of the debtor(s) are exempt.  "Exempt" means the assets are protected.  Exemptions vary from state to state.  Both Texas and Arkansas offer a fairly generous list of exemptions.  Keep in mind, an exemption does not avoid a secured debt.

In order to qualify for a Chapter 7, the debtor(s) must pass the "Means Test".  The "Means Test" is a comparison of the debtor's gross household income versus the average gross household income of a similar-sized family for the state in which the debtor resides.  Being over median income could force a debtor to file a Chapter 13 bankruptcy.

We are a debt relief agency. We help people file for bankruptcy under the Untied States bankruptcy code.
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