Chapter 7 is sometimes called 'straight bankruptcy'. The actual title in the Bankruptcy Code for Chapter 7 is 'Liquidation'.
This is the Chapter where you eliminate all of your debts, with some exceptions.
The common exceptions are income taxes, student loans and child support.
You can file individually or a joint case with your spouse. Other co-signers are not protected.
You keep all property which you are able to claim 'exempt' under a different list for each state.
Collateral loans like home mortgages and car loans can also be included but you have certain choices;
You can keep paying & keep the item (reaffirm), or you can give it back & not owe any balance (surrender), or buy the item at it's actual value & not owe any balance (redeem)
If your household income exceeds the average income for your state a formula is used (means test) to see if the case should be dismissed for 'abuse'. (since 10/05)
The court filing fee is $299 due to a $90 increase (since 4/06)
Two credit counseling sessions are required which cost around $100. These can be done on the phone or computer.
Attorney fees add another $500 to $1500 with most cases in the $600 to $750 range.
Figure your total fees and costs around $1000. Terms are usually $650 down, $350 balance a month or two later.
The case is open for about 4 months after which the court clerk mails out the 'discharge of debtor'
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