Understanding Chapter 7 Bankruptcy

Typically, Chapter 7 is referred to as “liquidation” because you turn over nonexempt property to the trustee assigned to your case. The confusion lies in the fact that most property is exempt.

Let a lawyer at our firm, Debra Booher & Associates, help you understand Chapter 7 and other bankruptcy options. Contact us today.

Keep Your Property With Chapter 7

Exempt property means it is not subject to attachment by creditors or in a bankruptcy, which means you get to keep it. The exemptions vary by state, and you should consult a bankruptcy attorney to determine what property may be claimed exempt in your state.

In most situations, if you wish to keep houses or your car or other vehicles, you simply maintain your payments as scheduled to the creditor. Chapter 7 is generally the simplest and quickest form of bankruptcy. Most people receive their discharge within five to six months of filing the case.

How Does Chapter 7 Work?

The theory in Chapter 7 is that all nonexempt assets are turned over to the trustee to be liquidated for funds to distribute to creditors. In reality, however, this only occurs if the debtor does not wish to “buy back” the property. Hence, suppose a debtor has a nonexempt widget worth $1,000 which he would like to keep. Rather than sell to someone else, the trustee is normally perfectly willing to sell back to the debtor for whatever price he could obtain from a third party.

The debtor may actually get a better deal because the trustee incurs no costs of sale, and in many circumstances, payments can be spread out over a short period of time. When someone has nonexempt property that cannot be protected in a Chapter 7 bankruptcy or if someone has sufficient disposable income to pay a significant portion of their debt over time, Chapter 13 bankruptcy may provide an alternative form of debt relief.

Frequently Asked Questions On Chapter 7

People hear a lot of misinformation about Chapter 7 bankruptcies. Here are the answers to some important questions that can help you better understand this debt-relief option:

How does filing for Chapter 7 bankruptcy affect my credit score?

Filing for Chapter 7 bankruptcy will have a negative – but short-term – impact on your credit score:

• Credit reports will show the bankruptcy for up to 10 years.
• Accounts included in the filing are marked as discharged, which may lower your score.
• Lenders may view you as a higher risk for new credit.

Despite the initial impact, Chapter 7 bankruptcy can provide relief from overwhelming debt, offering an opportunity to rebuild your credit over time. Most people do not find it difficult to reestablish credit and rebuild their credit within a year or two, and many see their credit scores rise to levels higher than they enjoyed while they had so much debt hanging over their heads.

Can I file for Chapter 7 bankruptcy more than once in Ohio?

Yes, but there are strict federal limits on how often you can file Chapter 7 bankruptcy:

• You must wait eight years from the date of a previous Chapter 7 discharge before filing again.
• If you previously filed Chapter 13, the waiting period for a new Chapter 7 discharge is six years in most cases, unless you paid at least 70% of your Chapter 13 plan debts.
• The bankruptcy code allows judges to deny relief if they determine a new filing is intended primarily to abuse the system.

Filing a subsequent bankruptcy too soon can result in dismissal or denial of discharge. A knowledgeable Ohio bankruptcy attorney can help ensure you understand these timelines and help you determine the best strategy if a second filing is necessary.

How does Chapter 7 bankruptcy affect my spouse in Ohio?

In Ohio, Chapter 7 bankruptcy applies to the individual who files. However, there are important considerations for spouses:

• Only the filer’s debts are discharged. The spouse’s separate debts are not affected.
• Joint debts may still hold both spouses responsible unless addressed during the filing.
• Property ownership rules under Ohio law may affect how shared assets are treated.

An experienced attorney can evaluate your specific situation to help minimize risk to your spouse and protect shared assets. We can help you make informed decisions, protect your financial future and comply with Ohio bankruptcy laws.

Contact Our Bankruptcy Offices In Northeastern Ohio

Debra Booher & Associates is one of the leading consumer bankruptcy law firms in northeastern Ohio because our experienced lawyers file more than 2,000 bankruptcy cases per year for clients in the region. We will explain things clearly, including your bankruptcy options, in order to help you take the right course of action for your situation.

To meet with a bankruptcy attorney at our firm, contact any of our six office locations to schedule a case evaluation. Call 888-542-1300 or send us an email to get started.

We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.