Seelinger Law

Chapter 7 Bankruptcy

Filing for Chapter 7 Bankruptcy

The United States Bankruptcy Code is divided into “Chapters,” some containing general principles of bankruptcy law applicable to any form of bankruptcy relief being sought by an individual or a business. Most individuals find one of two forms of bankruptcy to be beneficial, Chapter 7 relief or Chapter 13 relief.

In the Code, Chapter 7 is subtitled “Liquidation,” while Chapter 13 is subtitled “Individual Debt Adjustment.” Seelinger Law is experienced in both Chapter 7 and Chapter 13, and we can confidently say that we have never had an unsatisfied or unhappy client.

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How Chapter 7 Bankruptcy Works

Chapter 7 Does NOT Mean that They are Going to Liquidate Your Assets.

Instead, Chapter 7 “liquidation” implies that there will be a sale of an individual’s or business’ assets, with the sale proceeds to be paid to the creditors. Fortunately for individuals, the law allows individual debtors to keep enough of their assets to enable the individual to have a “fresh start” while eliminating unsecured debts through a bankruptcy discharge.

In most Chapter 7 cases, individuals can keep all of their unencumbered assets. Sometimes, individual debtors use Chapter 7 bankruptcy to “walk away” from assets whose value is far below what they owe, such as an older car with a high loan balance. Individuals filing for Chapter 7 have a choice in those circumstances - it is not a result forced on them.

Your attorneys at Seelinger Law will evaluate your circumstances, including the value of your assets and any risk associated with losing assets to a trustee sale, before advising you to file for Chapter 7 bankruptcy. If there is a serious risk that an asset would be sold in Chapter 7, you may be advised to file for Chapter 13 relief, instead.

The goal of a Chapter 7 case is to have the debtor’s personal liability to the creditors, with some exceptions, such as student loans, eliminated, or “discharged.”

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Is Chapter 7 Relief Right For You?

You May Benefit from Chapter 7 Bankruptcy if:

  • You are drowning in credit card debt, struggling to make the minimum payments each month with most of that money going to finance charges, and with your balances barely changing
  • You lost your job and fell behind on your bills, resulting in calls from your creditors demanding payments that you cannot afford to make
  • You became ill or were injured, resulting in your missing work and/or being stuck with large medical bills
  • You experienced divorce, and your living expenses or credit card payments are no longer affordable without your former spouse’s income
  • You are being sued by your creditors, who want to seize the funds in your bank account
  • You find yourself so far in debt that you realize it will be impossible to pay your debts off

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Understanding The Chapter 7 Process & Players

Filing Chapter 7 Quickly
When you choose to file a bankruptcy case through Seelinger Law, we help you gather up the information we need to prepare the bankruptcy petition, and your case is filed as soon as you are ready to do so. If you are in urgent need of bankruptcy protection due to actions taken by your creditors, we can file the bankruptcy on an emergency basis, so that creditors’ actions to collect or to seize your assets are stopped, even if you have not yet finished gathering up all of the information needed for the bankruptcy paperwork.

The Chapter 7 Bankruptcy Trustee
During the filing process, a trustee will be assigned to your Chapter 7 case. The trustee does not represent the creditors but is responsible for overseeing the bankruptcy estate. The trustee does not work for the Bankruptcy Court but serves an independent attorney who has been appointed by the Department of Justice to serve as trustee in cases filed under Chapter 7.

If a debtor owns property which is not exempt, the trustee is required to take possession of the property and to sell it, to generate money to pay to unsecured creditors. However, when all of your assets are exempt, as is usually the case, there is nothing for the trustee to sell, and instead, the trustee’s only role is to review your case for accuracy.

Life After Chapter 7 Bankruptcy
When you file for bankruptcy, you can stop paying on credit cards and most unsecured personal loans, and use that money for your living expenses. Without the burden of monthly payments on your dischargeable debts, you will find it easier to pay your utility bills, mortgage or rent payments, to afford groceries and probably an occasional meal out.

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Chapter 7 Frequently Asked Questions

You are allowed to make a mistake.

You will be given a fresh start. We can help and give you guidance when you need it most. The hardest part is reaching out.

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Seelinger Law