Chapter 7 is designed for debtors with financial difficulties who do not have the ability to pay their bills. The simplest definition of bankruptcy is that one has inability to pay his or her bills as they become due.

Under Chapter 7, depending on how much property a person has, you are entitled to exempt (or keep) a certain amount of property. In fact, most of the time debtors will keep all of their property and lose nothing. However, there are times when a bankruptcy estate has a lot of debt and many assets. In this case, the Chapter 7 Trustee will take possession of property, sell it and distribute the proceeds from the sale of that property to the debtor's creditors. However, even in these cases, the debtor will be able to use his or her exemptions to keep certain basic items that they need for a fresh start.

As indicated, in most cases debtors do not lose anything. If it appears that the debtor is going to lose property that they do not want to lose then a Chapter 13, as explained later, will be carefully explored.


The purpose of filing a Chapter 7 is to obtain a discharge of existing debts. In rare circumstances, a person may be found to have committed certain kinds of conduct such as fraud, embezzlement, or liability as the result of operating a vehicle while legally impaired or drunk by the use of alcohol or drugs. In those rare occasions the debtor will find that a certain debt is not discharged or the debtor is denied a discharge entirely.

Even if one receives a discharge, some debts are never dischargeable in a Chapter 7 or 13. Therefore, you may still be responsible for certain debts such as: taxes less than three years old, student loans, alimony and child support, criminal restitution and fines.

CH. 7

© 2017 by Carl C. Silver  I   Designed by Allegra Alpena