As a bankruptcy attorney, one of the most basic things I explain to clients is how a Chapter 7 case works. A Chapter 7 case is also known as a liquidation bankruptcy because creditors are supposed to be paid part of what they are owed when the trustee “liquidates” assets. After this process happens, a judge then declares the client’s debts discharged.
The reason a Chapter 7 is so appealing to many people, is that in over 90 percent of the cases, all of their property is protected by exemptions. No sale of property ever happens. Clients get their debts discharged and keep everything they own: their couches, tvs, small businesses, bank accounts. Everything.
Folks usually want to continue making payments on their house and cars. In Chapter 7, they have the option of continuing to pay on these type of secured loans, and continuing to drive the same automobile and live in the same place. Or, they can surrender an underwater house or car if they have better alternatives.
Learn more about your options in Chapter 7 during a free initial consultation. You’ll be glad you did.