Bankruptcy Basics: What Is a Chapter 7 Bankruptcy And How Does It Work?
November 9, 2009 7:24 am Chapter 7 Bankruptcy, Chapter 7 FAQ, NY Bankruptcy
As an experienced bankruptcy attorney in New York and Pennsylvania, I have helped many clients settle insolvency. The rules and conditions for filing bankruptcy are not simple to grasp, especially if you are already suffering stress from financial worries.
The first step on the path to a satisfying resolution is to understand some of the options available. In this NY Bankruptcy Blog, I hope to demystify some of the complicated concepts in this branch of law. This post is the first in a series explaining Chapter 7 bankruptcy. I hope it will help you understand your options.
What is Chapter 7?
The Bankruptcy Code is a federal law that deals with bankruptcy. Chapter 7 is that part (or chapter) of the Bankruptcy Code that deals with liquidation of assets to relieve debt.
A person who files a Chapter 7 case is called a “debtor.” In a Chapter 7 case, the debtor must turn his or her non-exempt property, if any exists, over to a trustee, who then converts the property to cash and pays the debtor’s creditors. In return, the debtor may - if conditions are met - receive a Chapter 7 discharge. The conditions include payment of a filing fee, eligibility for the discharge, and obedience to the orders and rules of the bankruptcy court.
More about how to get a Chapter 7 discharge
The discharge is very important. It is a court order releasing a debtor from all of his or her dischargeable debts and ordering that the creditors not to attempt to collect them. A debt that is “discharged” is a debt that the debtor is released from and does not have to pay.
You must file, maintain and be eligible for a Chapter 7 bankruptcy to obtain a Chapter 7 discharge.
NOT ALL debts are discharged by a Chapter 7 discharge. By law, some particular types of debts are not dischargeable under Chapter 7 - EVEN IF the debtor receives a Chapter 7 discharge.
Who is permitted to file and maintain a Chapter 7 case?
Any person who resides in, does business in, or has property in the United States is permitted to file a Chapter 7 bankruptcy case. The exception would be a person who has intentionally dismissed a prior bankruptcy case within the last 180 days.
To be permitted to maintain a Chapter 7 bankruptcy case, a person must qualify for Chapter 7 relief, under a process called “means testing.” I will explain means testing in my next post here on the NY Bankruptcy Blog.
Thanks for reading and let me know if you have any questions,
Matt
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Matt Hughson
New York Bankruptcy Lawyer
Ziff Law Firm, LLP
303 William St., Elmira, NY 14901
Tel: (607) 733-8866
Fax: (607) 732-6062
Toll Free: 1-800-943-3529
Email: mhughson@zifflaw.com
Web: http://www.zifflaw.com
November 10th, 2009 at 10:36 am
[...] Hughson Chapter 7 Bankruptcy, Chapter 7 FAQ, Consumer Tips, NY Bankruptcy In a previous blog post, “Bankruptcy Basics: What is Chapter 7 Bankruptcy and How Does It Work?” I began to explain the details of filing bankruptcy according to Chapter 7 of the federal Bankruptcy [...]
November 16th, 2009 at 2:17 pm
[...] discharged debt, as I have explained in other posts on the NY Bankruptcy Blog (check out “Bankruptcy Basics: What Is a Chapter 7 Bankruptcy And How Does It Work?”), is a debt that the debtor does not have to pay, and creditors can no longer attempt to collect. [...]