What is Chapter 7 Bankruptcy?

Dallas Chapter 7 Bankruptcy Lawyer


Chapter 7 Bankruptcy

Chapter 7 bankruptcy is an option for clients facing severe financial distress. Bankruptcy attorney Jamie Kirk with Allen Stewart, P.C. said Chapter 7 is what many people think of when they think of bankruptcy.


“It liquidates your unsecured debt,” Kirk said. “It gives you a fresh start and creditors get what they’re legally entitled to.”


She said Chapter 7 bankruptcy can free clients from leases on which they are upside down, or help dispel business-related debt from a closed or failed venture. These clients must meet certain income criteria to be eligible for Chapter 7.


“They can wind down their business, address any personal liability issues they may have so they can walk away not having a commercial tenant lease still after them because it was their business and they signed personally,” Kirk said.



Contact our Dallas bankruptcy attorney or call 866-440-2460 for your free consultation.


A Chapter 7 bankruptcy wipes out most unsecured debt, including credit card and medical debt. Unlike Chapter 13 bankruptcies, this happens without having to pay back balances through a repayment plan. Filing a Chapter 7 bankruptcy enacts an “automatic stay” order stopping creditors from pursuing those debts. The trustee, the court-appointed agent who oversees the bankruptcy, finds and sells the debtors nonexempt assets to pay creditors what they are owed.


Nonexempt assets are what the court will seize and sell to pay debts. However, the state of Texas offers exemptions for many assets, including the debtor’s home, retirement plan, life insurance, and $30,000 of personal property for a single person or $60,000 for a married person. If a debtor has no nonexempt assets, creditors receive nothing.


Kirk said debtors going through Chapter 7 bankruptcy can keep their vehicle as long as they continue making payments on it, or if they own it outright.


Chapter 7 bankruptcy works well for low-income debtors with few assets.


She said most of her clients who file Chapter 7 bankruptcy are those who fell on hard times because of circumstances beyond their control, including medical catastrophe or sudden job loss. Often they turn to payday lenders to bridge the gap, making the problem worse.


“After you get the first payday loan you need more, and it keeps snowballing,” Kirk said. “You then end up paying automatic drafts of $100 for the next six months on what was a $300 loan. You end up paying $1600. They have you over a barrel.”


Kirk said a Chapter 7 bankruptcy takes between four to six months on average to complete, once all fees are paid and the case is filed.


Bankruptcy cases vary depending on the circumstances leading up to them, and you deserve an attorney with the skills and experience to find the best solution for you. Contact Allen Stewart, P.C. and find your path back to financial health today.

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