When most people hear the answer to the question, “What is a Chapter 7 Bankruptcy,” they are immediately frightened and do not want to pursue filing a Chapter 7 bankruptcy case. The reason for their anxiety or fear may stem from the words used to describe a Chapter 7 case.
Before I go any further into explaining what is a Chapter 7 bankruptcy case, let me first try to help calm your fears and decrease your level of anxiety by telling you this fact up front — 99% of the Chapter 7 cases that are filed are concluded to be no-asset cases, meaning that the debtors discharge thousands of dollars in debts while keeping all of their property. That should help you breathe a little better as we go through the rest of this blog.
So, What Is A Chapter 7 Bankruptcy Case?
If you Google the answer to this question, you will likely find references to “liquidation” and “straight” bankruptcy. We do consider a Chapter 7 bankruptcy a liquidation bankruptcy; however, liquidation is not the case 99% of the time (as discussed above). Only about 1% of consumer bankruptcy cases are asset cases meaning that the debtor’s assets may be at jeopardy. However, just because a trustee declares a case to be an asset case does not necessarily mean that the debtor will lose any of his or her property. To illustrate, I will walk you through a scenario to help you better understand the definition of a Chapter 7 bankruptcy.
John and Jane Doe’s Chapter 7 Bankruptcy Case
Let’s assume that our couple qualifies to file for Chapter 7 relief because their income is below the average median income for a two-person household in Mount Holly. This means that their income does not appear to be sufficient to pay their bills after paying normal living expenses. They have a home, two cars and typical household goods and personal assets. They have a mortgage, two car loans, $30,000 in credit card debt and $50,000 in medical debts (John Doe had a heart attack last year, was out of work and just returned to work).
John and Jane file a personal Chapter 7 bankruptcy case. As an experienced New Jersey bankruptcy attorney, I have already reviewed the applicable bankruptcy exemptions to conclude that any equity in the home and cars are safe because of the exemptions. The remaining property the couple owns is not worth more than they are permitted to claim as exempt. The trustee reviews the case and comes to the same conclusion — the bankruptcy exemptions protect the couple’s assets. Therefore, John and Jane get rid of thousands of dollars in debt while keeping all of their assets.
Schedule A Free Consultation With An Experienced New Jersey Bankruptcy Attorney
You can eliminate thousands of dollars in debts and keep your assets by filing a Chapter 7 bankruptcy. We understand that you may be experiencing fear about losing assets if you file bankruptcy. However, we can explain why you can keep your property and still find relief from your debts.
Travis J. Richards and his staff are here to assist you with your financial problems. We focus our services on bankruptcy, debt consolidation and credit repair. We offer free bankruptcy consultations during normal business hours as well as on weekends and after-hours.
Call our office at 609-267-5297 or use our convenient online contact form to schedule an appointment today.
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