Business Law
Chapter 7 bankruptcy is a federal legal process that lets individuals and some businesses eliminate most unsecured debts, such as credit cards and medical bills, and get a financial fresh start. It is governed by the federal Bankruptcy Code and handled in federal bankruptcy court, though state law determines which property you can keep through exemptions, which vary significantly. In Chapter 7, a trustee may sell non-exempt assets to pay creditors, but many filers keep most or all of their property because of exemptions. Eligibility depends on passing a means test comparing income to the state median, and certain debts like most taxes, student loans, and child support generally cannot be discharged. Filing triggers an automatic stay that immediately stops most collection actions, including many lawsuits and garnishments. A lawyer can determine whether Chapter 7 or another chapter fits your situation, prepare the detailed petition and schedules, apply the correct exemptions, represent you at the meeting of creditors, and help you avoid mistakes that could jeopardize the discharge. First steps: gather income, debt, asset, and expense records, avoid transferring assets or paying select creditors before filing, complete required credit counseling, and consult a bankruptcy attorney to review your options and protect your property.
