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A chapter 7 bankruptcy is the most common type filed bankruptcy . When you file a chapter 7 bankruptcy you are allowed to eliminate most of your outstanding debts. So, after filing for a chapter 7 bankruptcy you will be able to eliminate credit card debts, outstanding medical bills and other various debts.

However, the downside of a chapter 7 bankruptcy is that you may have to sell off some of your assets to pay off your debtors. Under a chapter 7 any assets that you sell will be given back to the debtors. But, the majority of people, who file a chapter 7 bankruptcy, will not have to sell off any of their property as bankruptcy laws allows for certain property to be exempt from creditors. This is known as an exemption. These exemptions vary from state. For example, in my home region Nevada, a car worth up to $15,000, is exempt from liquidation. Also, within limits, you are allowed to withhold furniture, clothes, and even a single firearm. So, don’t worry, filing for a chapter 7 will not leave you destitute and sleeping on your floor. But, your Ming Vase or Chippendale furniture will not be free from liquidation.

A chapter 7 bankruptcy is not the best solution for all consumers. First of all, if you are behind on your mortgage payment, filing for a chapter 7 bankruptcy will not allow you to save your home. Also, if you maintain numerous non-exempt assets, that you want to keep, you will not want to file a chapter 7 bankruptcy. For example, if you have expensive antiques or artwork that you fancy a chapter 7 is not recommended. Additionally, if you make too much money you may not even qualify for a chapter 7 bankruptcy. Under a chapter 7 bankruptcy you will be required to pass a “means test.” To pass the means test your income, taking into account the number of dependents, should be less than the median income of your respective home state. So, a millionaire can not file a chapter 7 personal bankruptcy. Also, certain debts can not be eliminated. For example, unless you are suffering from extreme hardship you can not discharge your school loans. As a result, if you main debt is a student loan, filing a chapter 7 bankruptcy will not be advantageous.

In conclusion, assuming bankruptcy is appropriate; a chapter 7 bankruptcy is likely to be your best option. But, please see several attorneys before you decide to declare bankruptcy. I would recommend that you contact your local bar and ask for a referral. Also, if you are low income you may qualify for free legal attend. Above all, get help from a competent attorney.

References-

US Courts

http://www.uscourts.gov/bankruptcycourts/bankruptcybasics/chapter7.html