Chapter 7 Bankruptcy Could Give You a Fresh Start

The government and the law recognize that people can fall upon financial hard times because of illness, job loss or for many other reasons. For this reason, chapter 7 bankruptcy laws were put in place to allow people to get a fresh start. Filing for bankruptcy protection is never anyone’s first choice, but there are circumstances that make chapter 7 bankruptcy the best choice.

Chapter 7 Bankruptcy

Chapter 7 is the most common type of personal bankruptcy. Technically, it is a liquidation bankruptcy, meaning that the debtor’s nonexempt property could be sold and the funds divided among the creditors. A Chapter 7 bankruptcy is usually complete or discharged in three to six months.

The Automatic Stay

The court issues a “stay” order as soon as the bankruptcy has been filed. Creditors are not allowed to contact you – no letters, no phone calls. You can take a deep breath and enjoy the silence.


The Creditor’s Meeting

Approximately one month after the filing of the bankruptcy, a meeting is held with creditors. In reality, creditors rarely attend. The trustee asks a few questions. This meeting is normally very short and is the only time you are required to go to court.

Exempt and Nonexempt Assets

Missouri law allows people to keep exempt assets. Nonexempt assets are sold. Determining which assets are exempt and nonexempt is one of the important ways in which an experienced bankruptcy attorney can really help. Exempt property could include:

Equity in your home up to certain limits

Essential household goods, including furniture, kitchenware, bedding and other items – many people keep all of their household belongings

401(k) and other retirement accounts

Social Security, disability and veteran’s benefits

Workers’ compensation and unemployment benefits

An inexpensive vehicle

Trade and professional tools up to $3,000

Some jewelry

A wild card exemption

Discharged Debts

Most unsecured debt is wiped out with a Series 7 bankruptcy including:

Credit cards

Medical bills

Many judgments from lawsuits

Personal loans

Past due utility bills

Debts That Will Not Be Discharged

Debts that are secured or considered a priority debt will remain after the bankruptcy, but there will be more money available to pay these bills. These debts include:


Car payments

Most income taxes, penalties and fines

Support payments

Student loans

It’s estimated that about 770,000 people will file for bankruptcy in 2017, about the same number as last year. That’s a lot of people by any measurement. There are many signs the economy is improving, but that doesn’t really matter to someone who has been struggling for some time and has finally reached their limit. When the collection letters and phone calls start piling up and there’s no way to pay the bills, it’s time to discuss your options with a bankruptcy attorney.

If you are considering bankruptcy, schedule a free consultation with John Henderson, a bankruptcy attorney with more than 30 years experience. Call John Henderson Law at 855-866-4505 or visit the website to learn more.


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