Also called “liquidation” or “straight” bankruptcy, Chapter 7 bankruptcy allows a person to discharge most debt without repaying any portion of it. You must fall below a certain income limit, or show that your net, or “take-home” pay is being depleted by reasonable and necessary expenses, such that there is not enough left to make any significant repayment to your creditors. Certain categories of debt are non-dischargeable, such as child support, certain tax debt, and most student loans. However, even if you may not receive the benefit of the discharge as to those debts, it may still be helpful to file under Chapter 7 of the Bankruptcy Code if it means doing away with other debt so that you can redirect your money to get caught up on the non-dischargeable debts.
Bankruptcy can be a complicated and confusing process. There are non-attorney services available to fill out the forms at a very low cost, however you should be aware these services are not allowed to give legal advice, and may not even know the significance of certain questions that are asked of a person in the bankruptcy paperwork. It may be tempting to fill out the forms and file them yourself or hire a document preparer to fill them out for you, but hiring an experienced bankruptcy attorney is the only way to avoid unexpected trouble in your case. Most clients believe theirs is a simple bankruptcy, but quite a bit of review and analysis goes into pre-bankruptcy planning in every case by an attorney. This is to ensure that what should be a trouble-free bankruptcy is exactly what you receive. Unfortunately for many people, by the time they realize there are problems in their bankruptcy case, it is too late. You cannot simply dismiss a case because things are going wrong. Our advice to anyone considering filing for bankruptcy protection is to consult with at least one experienced bankruptcy attorney first and choose the one who fits your needs best. Even if that may not be our office, we would prefer that you be in good hands from the outset of the case than have unpleasant surprises by not hiring an attorney.