Chapter 7 Bankruptcy Basics


What Is Chapter 7 Bankruptcy?

Chapter 7 a type of bankruptcy that is available to both individuals and businesses under the United States Bankruptcy Code. It is known as a “liquidation bankruptcy,” as it involves the liquidation of a debtor’s non-exempt assets in order to pay back creditors. Upon the conclusion of a Chapter 7 bankruptcy, all of a debtor’s eligible debts are discharged.

What Kinds of Debts Can I Eliminate with Chapter 7 Bankruptcy?

Most consumer debts are dischargeable in bankruptcy. Some of the more common types of debt that people eliminate in Chapter 7 include the following:

  • Medical bills
  • Credit card debt
  • Civil judgments
  • Utility bills
  • Past-due rent
  • Personal loans
  • Auto loans
  • Certain tax debts
  • Collection accounts

Will I Lose All of My Assets if I File?

Consumers are often concerned that they will lose all of their assets and be left destitute if the file for Chapter 7. It is important to note that only a debtor’s non-exempt assets are liquidated in Chapter 7, and there are exemptions for a broad range of assets. Individuals are allowed to keep a certain amount of their equity in their home if they own one, as well as up to a certain value of personal items, cash, work tools, furniture, jewelry, and other categories of assets. In fact, the majority of Chapter 7 bankruptcies are “zero asset” bankruptcies, meaning that all of the debtor’s assets are exempt. In these cases, the individuals who file are able to obtain the benefit of the bankruptcy discharge without having to part with any of their assets.

Do I Need an Attorney to File?

People who are experiencing financial problems are often trying to scrimp and save at every opportunity they have. Not surprisingly, then, if you are considering bankruptcy, you may be wondering if you can forgo the costs associated with hiring an attorney. It is important to remember that filing bankruptcy is a complicated matter, and it is absolutely essential that the documents you provide to the court are complete and accurate. Failing to account for certain assets could result in significant issues, including the rejection of your bankruptcy filing or even criminal action related to bankruptcy fraud. For this reason, it is highly advisable to have the assistance of an attorney when filing for bankruptcy. In fact, the United States Courts website actually states that “seeking the advice of a qualified attorney is strongly recommended because bankruptcy has long-term financial and legal outcomes.” At JLT Law, we assess fees on a case-by-case basis and base them on the relative complexity of a given case.

Call JLT Law Today to Speak with a Salt Lake City Bankruptcy Lawyer

If you are in debt and are having trouble paying your bills, Chapter7 bankruptcy may be able to help. Attorney Jory Trease has been licensed to practice law in the state of Utah for more than 30 years and will review your situation with you in a free consultation. To schedule an appointment with Mr. Trease, call our office today at 801-797-2098 or send us an email through our online contact form.