Chapter 7 (Straight Bankruptcy)
In a bankruptcy case under chapter 7, you file a petition asking the court to discharge your debts. The basic idea in a chapter 7 bankruptcy is to wipe out (discharge) your debts in exchange for your giving up property, except for "exempt" property which the law allows you to keep.In most cases, Chapter 7 Debtors do not lose any property.But property which is not exempt is sold, with the money distributed to creditors.
If you want to keep property like a home or a car and are behind on the payments on a mortgage or car loan, a chapter 7 case probably will not be the right choice for you. That is because chapter 7 bankruptcy does not eliminate the right of mortgage holders or car loan creditors to take your property to cover your debt.
If you earn above the median income for your state and your debt is primarily consumer as opposed to business debt, then to stay in Chapter 7 you will have to pass a means test that compares your income to expenses as determined by the government.
William P. Turner, Attorney at Law
601 N. Mur-Len, Suite 5
Olathe, KS 66062