Perrotta & Cahn has been practicing bankruptcy law in northwest Georgia longer than any other firm in the area. Here, we answer some commonly asked questions about filing for Chapter 7 bankruptcy.

Chapter 7 bankruptcy is a legal process by which most unsecured debts can be discharged, or wiped out. Chapter 7 bankruptcy is sometimes called liquidation because any non-exempt assets the debtor has can be sold (liquidated) by the trustee for the benefit of creditors. Many Chapter 7 bankruptcy debtors have no non-exempt assets, so there is no liquidation and unsecured debts are simply discharged. There are, however, certain unsecured debts that are not dischargeable in Chapter 7 bankruptcy.

The most common debts that are dischargeable in Chapter 7 bankruptcy include:

  • Credit card debt
  • Repossession deficiencies on vehicle loans
  • Medical bills
  • Personal loans
  • Judgments
  • Auto accident claims
  • Negligence claims
  • Business debts
  • Leases
  • Guaranties
  • Tax penalties over three years old
  • Income taxes that are not priority taxes

Under the United States Bankruptcy Code, Congress has determined that certain types of debt are not dischargeable in Chapter 7 bankruptcy for public policy reasons, which means you must still repay these debts after bankruptcy. The following debts are usually not dischargeable:

  • Child support and spousal support (alimony) obligations
  • Government-backed student loans
  • Debts incurred by fraud or intentional wrongdoing
  • Criminal fines and restitution

To file for Chapter 7 bankruptcy, you must qualify under the Chapter 7 means test. The means test first compares your income to the median income in Georgia. If your income is lower than Georgia’s median income, you can file for Chapter 7 bankruptcy. However, if your income is greater than the median income, other calculations regarding your income and allowable expenses are required to determine whether or not you can file for Chapter 7 bankruptcy.

The answer to this question depends on your specific circumstances. Generally speaking, Chapter 7 bankruptcy is better for people who have a lot of unsecured debts, like credit card debt and medical bills. If you do not have much property, your income is low, and most of your debts are unsecured, you might want to consider Chapter 7 bankruptcy. Chapter 13 bankruptcy, on the other hand, tends to be a better option for those who have regular income and non-exempt property they would like to keep. For more information about Chapter 13, please see our Chapter 13 bankruptcy questions.

If you are considering Chapter 7 bankruptcy, please contact Perrotta & Cahn to schedule a free initial consultation with one of our experienced bankruptcy attorneys. With offices in Cartersville, Calhoun, Dalton and Dallas, we likely have a location convenient to your home or workplace.