| BANKRUPTCY CLINIC |
Q: How does a Chapter 7 Bankruptcy work?
A: Chapter 7 is designed for Debtors in financial difficulty who do not
have the ability to pay their existing debts.
Under Chapter 7, a trustee takes possession of all your property. You
may claim certain of your property as exempt under governing law. The
trustee then liquidates the non-exempt property and uses the proceeds to
pay your creditors according to priorities of the Bankruptcy Code.
The purpose of filing a Chapter 7 case is to obtain a discharge of your
existing debts. If, however, you are found to have committed certain
kinds of improper conduct described in the Bankruptcy Code, your
discharge may be denied by the court, and the purpose for which you filed
the bankruptcy petition will be defeated.
Even if you receive a discharge, there are some debts that are not
discharged under the law. Therefore, you will still be responsible for such
debts as certain taxes, student loans, alimony and support payments, debt
fraudulently incurred, debts arising out of a divorce judgement, debts for
willful and malicious injury to a person or property, and debts arising
from a drunk driving judgement.
Under certain circumstances, you may keep property that you have
purchased subject to a valid security interest. Your attorney can explain
the options that are available to you.
A: Chapter 7 is designed for Debtors in financial difficulty who do not
have the ability to pay their existing debts.
Under Chapter 7, a trustee takes possession of all your property. You
may claim certain of your property as exempt under governing law. The
trustee then liquidates the non-exempt property and uses the proceeds to
pay your creditors according to priorities of the Bankruptcy Code.
The purpose of filing a Chapter 7 case is to obtain a discharge of your
existing debts. If, however, you are found to have committed certain
kinds of improper conduct described in the Bankruptcy Code, your
discharge may be denied by the court, and the purpose for which you filed
the bankruptcy petition will be defeated.
Even if you receive a discharge, there are some debts that are not
discharged under the law. Therefore, you will still be responsible for such
debts as certain taxes, student loans, alimony and support payments, debt
fraudulently incurred, debts arising out of a divorce judgement, debts for
willful and malicious injury to a person or property, and debts arising
from a drunk driving judgement.
Under certain circumstances, you may keep property that you have
purchased subject to a valid security interest. Your attorney can explain
the options that are available to you.
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