Chapter 7 Bankruptcy is frequently referred to as a Liquidation or Discharge Bankruptcy.It is primarily for people who are burdened with credit card debts, medical debts, old repossessions or foreclosures and some types of judgments. Occasionally certain tax debt can also be discharged.All debts must be included in your case.
This does not mean that all debts listed are to bedischarged. If you have a car or furniture that you are paying on and you can demonstrate anability to continue those payments. The Court will allow that arrangement to continue, and youmay keep those items. The term of a Chapter 7 case takes 4 to 6 months from beginning to completion (discharge).
During that time mostpeople attend only one hearing, which takes place in front of a Trustee, not a judge and in aconference room, not a courtroom and generally lasts less than fifteen minutes.In this state most types of property are exempt. This means that you can expect to keep it.Property that can be considered collateral for a loan, can be kept as long as you have the abilityto continue paying for them. Secured property that you do not wish to keep, can be surrendered without furtherliability to you. In many instances it is possible to negotiate a fair market value on personalproperty, which allows you to retain the item or items reduce the balance.At the end of your case, a discharge order will be issued by the Court.
A debt that isdischarged could also be described as excused or forgiven. Collection activities may not resumeon discharged debts after a Chapter 7 case is finished. Any attempts to do this should bepromptly reported to your attorney.Some types of debt that are not discharged in a Chapter 7 are most student loans,mortgage arrearage when you wish to keep your home, and Income taxes, and child support. As in all types of bankruptcy an "automatic stay" is put into effect immediately upon thefiling of your case. You can think of an automatic stay as a restraining order against yourcreditors. Once they are notified of your case, they are stayed or stopped from continuing anyattempts to collect their debt.