Chapter 7 Bankruptcy

Chapter 7 is often referred to as a straight bankruptcy, as it is short in duration and discharges, or wipes out, most unsecured secured debts such as credit cards, medical bills, personal loans, and other types of debts with no collateral or security attached. (See below for examples of unsecured debts.)

If you have secured debts where you would like to keep the collateral, such as a house or car, you must continue to make those regular contractual payments. Normally you can keep that property in a Chapter 7 if you are up-to-date on the payments.

In order to determine if a Chapter 7 is best for you we look at two areas:

• ASSETS: First we look at whether we can protect your assets – items that you already own or have an interest in – underneath a Chapter 7. Underneath Virginia laws you are only allowed to keep assets valued at a certain amount if you file a Chapter 7. In some cases if assets are greater than the allowable exemptions the court will take those assets and sell them to pay back your creditors. Most folks don’t want that to happen. We can evaluate your case to determine can we protect the things you own and that are dear to you.
• INCOME: The second area we review if income. Chapter 7 is reserved for folks who have no ability to pay back anything on their unsecured debts. In reviewing income we consider many factors: past income, future income, and what your regular future monthly expenses will be after bankruptcy. These factors determine who can successfully file a Chapter 7 based on their income.

A Chapter 7 bankruptcy stays on your credit record for 10 years from the date you file. However, most folks find they can successfully rebuild their credit after only about 2 to 3 years.

Some debts are not dischargeable in a Chapter 7. In particular student loans cannot be wiped out in a Chapter 7 and most taxes cannot be discharged. If you owe debts to a ex-spouse from a divorce, whether support or payments due under a separation agreement, these debts are normally not dischargeable in a Chapter 13. The law also prohibits discharge of certain other debts based on fraud and other factors.

Unsecured Debt Examples:

• Credit Cards
• Medical Bills
• Personal Loans
• Deficiency claims following a repossession or foreclosure
• Old Utility Bills
• Most Older Collection Accounts

Secured Debts Examples:

• Mortgages or Equity Lines on Your Home
• Car Payments
• Furniture Payments
• Rent-to-Own Payments
• Jewelry Payments