Chapter 7

Chapter 7 is the most common bankruptcy. In it, you can get rid of all unsecured debts including credit cards, medical bills, and other debts not secured by property.

IS THERE A MINIMUM AMOUNT OF DEBT REQUIRED TO BE ELIGIBLE TO FILE BANKRUPTCY?
No. If you only have one creditor you can still file bankruptcy. Also there is no set limit on what your monthly income can be to file bankruptcy.

WHAT PROPERTY CAN I KEEP?
There is no simple answer as to this without actually talking to an attorney who is well versed in bankruptcy law. This is because everyone's situation is different. This is the reason we ask you to call and come for your FREE, first appointment. It allows us to better understand your situtation and be able to explain how bankruptcy will work for you and the property you can keep.

In general, all property which you do not claim as exempt is surrendered to the Trustee who divides it among your creditors. This is not as harsh as it sounds. In most cases, the people we represent surrender nothing to the trustee.

WHAT ARE EXEMPTIONS?
To understand what is exempt, it is important to understand what equity is. Equity is the value of property you own. For example, say your home is valued at $25,000, however, you owe the bank $20,000. If you sold the property and paid off the bank then you would only have $5,000. Therefore, your equity is $5,000.

Your equity must be protected in bankruptcy.

In bankruptcy, there are exemptions which are laws which allow you to keep certain property. Recent laws have changed the value of exemptions. See below for a more detailed list of current exemptions. A person filing bankruptcy can use either all the state exemptions OR all the federal exemptions, but not both. The federal exemptions are typically of greater value. If both husband and wife file then the exemption is doubled.

For example, there is a home exemption (federal) which is $20,200. Using the house example above, the $5000 of equity in your home would be protected by the home exemption. If both husband and wife file then you have $40,400 of home exemption.

The most common exemptions (federal) include:

A more complete list of exemptions can be found here. The exemptions are periodically adjusted for inflation.

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