Debt Negotiation and Payment Plans

Chapter 7 is an affordable solution to people with limited income or resources. It is a liquidation bankruptcy that eliminates most of your general unsecured debts such as credit cards and medical bills without the need to pay back balances through a repayment plan.

When you file for Chapter 7, an order called the “automatic stay” immediately stops most creditors from pursuing collection efforts and is a means to put an immediate end to harassing phone calls, legal action and garnishment by creditors. A bankruptcy trustee is then appointed to administer your case. The bankruptcy trustee gathers and sells the debtor's nonexempt assets and uses the proceeds of such assets to pay holders of claims (creditors) in accordance with the provisions of the Bankruptcy Code. Part of the debtor's property may be subject to liens and mortgages that pledge the property to other creditors. In addition, the Bankruptcy Code will allow the debtor to keep certain "exempt" property; but a trustee will liquidate the debtor's remaining assets. Accordingly, potential debtors should realize that the filing of a petition under chapter 7 may result in the loss of property but in many cases, debtors will not have to give up any of your property to file. This exempt property will generally include cash, household furnishings, clothing and other ordinary items, tools of trade, personal injury and worker’s compensation claims, up to one million dollars for retirement investments or pension plans, an automobile and equity in your residence. If you do not have equity in your residence or do not own your primary residence, the exempt property could include an additional wild card protection to protect extra assets such as additional vehicles, motorcycles, jet skis, quads, motor homes, trailers, boats, tax returns, time shares, and equity in non-residential property.