You Can Get A Fresh Start With Chapter 7 Bankruptcy

Bankruptcy isn’t a bad word. It’s a fact of life when debts get to a point where you no longer can control them. Insurmountable debts are nothing to be ashamed of, but with the help of a Chapter 7 bankruptcy attorney, your financial future doesn’t have to be totally out of control.

My name is Yvette Gaff Kleven, and for 40 years, I’ve served people in Fort Wayne as a Chapter 7 bankruptcy lawyer. My goal is to help you reclaim financial confidence after a hard time. Debt puts you under incredible stress, but bankruptcy is one way to get back out from under all that. For most, how to pursue bankruptcy is a bit of a mystery, so on this page, I want to explain the benefits of Chapter 7.

A Quick Overview Of Chapter 7

Chapter 7 of the national bankruptcy code details the manner in which people with limited income and assets can pursue bankruptcy. The bankruptcy strategies available in Chapter 7 center on the concept of dissolution bankruptcy, also known as liquidation, over debt consolidation.

How Chapter 7 Helps People

The major aspect of a Chapter 7 bankruptcy that helps people is the discharge of debt. This can allow you to almost totally clear your financial slate and reorganize your future. The debt Chapter 7 discharges include:

• Credit card bills
• Medical debt
• Payday loans
• Past due rent
• Personal loans

The above are all forms of unsecured debt, which are debts not tied to a home, such as a mortgage. Unsecured debts are often the type that people facing money flow problems find themselves in most often.

Automatic Stays On Debt Collector Actions

Additionally, filing for bankruptcy can have other larger impacts on your life, the biggest one being the immediate halting of debt collection action against you. Debt collectors cannot continue contacting you or garnishing your wages.

I cannot emphasize how important the halt on debt calls is for most of the clients I’ve worked with. Debt collection agencies are notoriously aggressive, often to the point of abuse in their efforts. However, if they continue to call you after filing for bankruptcy, they can be held liable.

Wage garnishment is the process by which debt collectors use a court order to secure a portion of your wages through your paycheck. You don’t get the opportunity to prioritize your bills as necessary. The decision is made for you.

Stopping wage garnishment in bankruptcy immediately frees up your paycheck to be in your control. You will have more ability to pay for the things you need in your life. However, it is important to know that the wage garnishment is temporary. If you do not resolve those wage garnishing debts through bankruptcy, the debt collectors can pursue them again in the future.

Limits Of Chapter 7 Bankruptcy

Chapter 7 bankruptcy has several important limits for anyone considering this option. This chapter, like all chapters, does not address certain types of unsecured debts:

• Student loans
• HOA fees
• Alimony
• Child support

There is a long list of debts that cannot be discharged. Additionally, a Chapter 7 bankruptcy will impact your credit score for up to 10 years.

Who Qualifies For Chapter 7 Bankruptcy

The attractiveness of Chapter 7 bankruptcy lies in its simplicity and speed. You can almost certainly be through with Chapter 7 bankruptcy in a few months versus other types of bankruptcy, which may take years. There is one qualification for a Chapter 7 bankruptcy, and that is resource-based:

• Income: If your income is less than the median income in Indiana, then you can pursue Chapter 7 without question. You automatically qualify.
• Means test: The court will closely review your finances, looking at several factors, including income and expenses. The goal of this review is to determine your disposable income and ability to make payments.

Businesses can file for Chapter 7 bankruptcy as well, and furthermore, they do not need to pass a means test to determine if the business’s debts are mostly business debts.

Businesses And Chapter 7

Not every business opts for a Chapter 7 bankruptcy for multiple reasons. The major one is that not all businesses are eligible to receive a discharge at the end. This non-discharge position isn’t necessarily a problem for a company formed under a separate entity such as a corporation or an LLC.

A direct owner facing Chapter 7 may be able to receive the benefits of discharge, but that’s not a guarantee. Direct-ownership businesses going into bankruptcy typically mean the owner is also undergoing bankruptcy. This is a complicated situation and one that I’ve helped many clients resolve in the last 40 years of bankruptcy service.

FAQs For Chapter 7 Bankruptcy

The distress of looming debts and uncertainty are withering. There’s often too much stress ahead and too few answers. I can help you with answers and the stress. With 40 years of experience in bankruptcy law in Indiana, I’ve seen every kind of question you may have. Here are the answers to a few of the most common:

What happens in Chapter 7 bankruptcy?

In Chapter 7 bankruptcy, your non-exempt assets are liquidated to make a single payment toward your creditors. Once that payment is made, the rest of the debt is discharged. I mentioned above some of how this works and some of the limitations; I did not cover all of the property you may be able to retain after a Chapter 7 bankruptcy.

You are allowed to retain certain assets after Chapter 7 bankruptcy, but these are limited by Indiana state law.

What assets do you lose in Chapter 7 bankruptcy?

It is perhaps easier to look at the assets you can retain in Chapter 7 bankruptcy rather than the assets that will go through liquidation. Indiana’s exemptions to bankruptcy include:

• Real property exemption: You can retain up to $22,750 in home equity or personal property. If you have more equity than that in your home, that equity will be liquidated – likely through a sale.
• Tangible Personal Property: You can exempt up to $12,100 of tangible personal property.
• Pensions: The state of Indiana maintains a list of pensions and retirement benefits that are exempt from Chapter 7.
• Personal property: Indiana lists several types of personal savings accounts that are exempt, as well as health aids and military equipment or uniforms you may own.

Can you file Chapter 7 if you don’t have any assets?

You can definitely file for Chapter 7 if you don’t have any assets. No-asset bankruptcies are extremely common, and the rules are not any different.

Get Experienced Bankruptcy Help Today

I stand with you against creditors and lien holders in the face of foreclosures. This is a stressful time for you, but you aren’t going to do this alone. I’ll help you every step. Call my office, Kleven Law, LLC, at 260-407-7077 or send an email using this form.

Kleven Law, LLC, is a debt relief agency that helps people file for bankruptcy relief under the Bankruptcy Code.