Chapter 7 Bankruptcy

Who Qualifies for Chapter 7?

Individuals who will not benefit from a Chapter 13 prefer to wipe out debt in a Chapter 7. The Chapter 7 process is much shorter than a Chapter 13, and you do not have to repay your debt. To qualify for a Chapter 7 bankruptcy, you must pass what is known as “the Means Test.” If you fall below the median income level for your household size within Maryland, you automatically pass the Means Test. The Census Bureau and the IRS determine the median income for each state. Your household income is determined by averaging your last six months of income. You can still qualify for Chapter 7 even if your household income exceeds the median income, but the formula used is complicated and best analyzed by an attorney. We make a careful study of your last six months income to do all we can to qualify you for a Chapter 7, if that is the best way to wipe out your debt.

What Chapter 7 Bankruptcy Can Do

Chapter 7 bankruptcy delivers three powerful benefits. First, it wipes out unsecured debts such as credit cards, medical bills, previous foreclosure and repossession deficiencies, lawsuits and judgments. Second, the moment we file on your behalf with the bankruptcy court, federal law “automatically stays”, or prevents, your creditors from taking any collection action. Creditors will no longer be allowed to call or harass you regarding your debt. Third and most importantly, once you have followed our direction and complied with all requirements, the court awards you a Discharge of your debts. Once and for all, the Discharge erases your debts and gives you a Fresh Start.

What Chapter 7 Bankruptcy Cannot Do

Some debts cannot be wiped out in Chapter 7. These include: alimony and child support, certain taxes, student loans, and damages related to criminal restitution such as damages from drunk driving. You can still get a discharge for your unsecured debts such as credit cards and medical bills; however, you will owe the student loans, taxes, alimony, child support, and criminal restitution debts.

Chapter 7 bankruptcy law is complicated and, for most people, often confusing. Contact the Bankruptcy and Tax Law Center and Murray Singerman, Esq. today or complete our Contact Form  for a FREE consultation, so that we can guide you through the bankruptcy process. In the meantime, if you want to learn even more about Chapter 7 Bankruptcy, see our Chapter 7 Bankruptcy Frequently Asked Questions.