What Is A Chapter 7 Bankruptcy Case And How Does It Work?

The idea behind the chapter 7 is to give you a fresh start. It allows you to keep a certain amount of property with which to make your fresh start, to put all of your debts behind you and move on to the future. If you file a chapter 7 in Maryland you can keep $12,000 worth of personal property, which means nobody would be able to come and take things like cars that have been paid off, bank accounts, household goods, clothing etc. from you. You are also allowed to keep any pensions or 401Ks they may have or retirement plans. You can also keep up to $22,000 of equity in a home if you own one.

You can also keep any personal injury settlements, so if you have been in a car accident or have a worker’s compensation case, you can keep that money too. The vast majority of people who file chapter 7 lose absolutely nothing and it is the job of the bankruptcy attorney to make sure that the client does not lose anything.

Who Exactly Can Qualify For A Chapter 7?

The main qualification for a chapter 7 is that the person must not have filed a chapter 7 in the 8 years prior. You can only file a chapter 7 once every 8 years, but other than that, anyone has an absolute right to file a chapter 7 bankruptcy. The issue is more whether or not a person would want to. The reasons why someone would not file is because they have assets that cannot be protected in a chapter 7. A person also might not want to file a chapter 7 if their income is too high and they cannot qualify for a chapter 7. But as long as a person hasn’t filed in the last 8 years, they would be eligible to file a chapter 7.

Who Is Permitted To File And Maintain A Chapter 7 Case?

Any individual can file a chapter 7. A married person does not have to file with their spouse, because they can file individually or they can file jointly depending on their situation. If one spouse has a lot of debt whereas the other has no debt or if they are separated or not getting along then there is no reason to include the spouse if the person does not want to. Businesses can file a chapter 7 but it is a waste of time for most small businesses to file. Because the person would usually be personally liable, so the business filing of a chapter 7 would not help personally. There is really no point of filing a chapter 7 for a business because it would just open the door for the chapter 7 trustee to examine all the records of the business so that he could figure out if the person had been taking money out of it.  The Chapter 7 trustee can then try to get that money back for the creditors. If someone was personally liable, they would just need to file personally and forget about the business.

Who Should Not File For A Chapter 7 Case?

It is probably not worth a person’s time to file a chapter 7 if their debts are less than $10,000.  in that case, they may be better off just trying to settle with their creditors. Another reason to not file a chapter 7 bankruptcy would be if the assets cannot be protected in the chapter 7. Someone who was expecting to get a large inheritance in the next 6 months to a year should also probably not file a chapter 7 bankruptcy because that would become part of their bankruptcy and go to the creditors. Someone not having a lot of debt or having assets that cannot be protected are probably the two main reasons a person would not want to consider filing a chapter 7.

How Long Does A Chapter 7 Typically Last?

Filing of the chapter 7 immediately stops all creditors and that is what most people are looking for. It is the immediate relief to stop the garnishment, stop the repossession, stop the foreclosure and stop the utility turnoffs. The main day that most people are worried about is the filing day because that is when all the harassment stops and all the collection efforts stop. Normally, the chapter 7 will last about 90 days from start to finish, so the person will get their discharge about 90 days after the case has been filed, but the main day that people are generally concerned about is the filing day because that is when all the harassment stops and they feel like they are really getting their fresh start.

What Are Some Signs That A Person Should Choose A Chapter 7 Bankruptcy And Are There Any Warning Signs?

One major sign is that you are being sued. A clear warning sign that bankruptcy may be imminent for a you would be if any of one of your creditors has filed a lawsuit against you to collect the debt, you are foreclosure or you are being threatened with repossession. Other signs you should look for would be if you look at your income and expenses and realized your bills every month were more than your income and you have run up a fair amount of credit card debt. Human nature tends to ignore bad news so many people do not even realize how much debt they have until they start to get lawsuits and collection calls which is when it is really time to consider doing a chapter 7.

For more information on Chapter 7 Bankruptcy, a free initial consultation is your next best step. Get the information and legal answers you’re seeking by calling 443-860-0088 today.