For many clients, Chapter 7 is the ideal option and the most expedient means by which to improve their financial situation. Here are the basics of a Chapter 7 case:
Liquidation (selling) of clients' unexempt assets (property that can be taken from the debtor and sold to pay creditors) and paying the proceeds of the sale to the clients' creditors.
Whatever debts remain unpaid after liquidation are discharged, which simply means the clients' legal obligation to pay the debts is terminated.
While there are some debts that cannot be discharged, most can and clients are allowed to claim exemption for some assets, such as their home, car, clothing, furniture, etc.
In a typical Chapter 7 case, clients keep most (and sometimes all) of their property and only repay those debts secured by the collateral they wish to keep after the bankruptcy (such as home loans or auto loans).
Chapter 7 allows clients who can afford their regular monthly payments for secured debts (such as home or auto loans), but cannot afford the additional payments on unsecured debts, such as credit cards, and medical bills, to have the unsecured debts discharged.
There are few decisions that can have such a life-altering impact as the decision whether to file bankruptcy. Practically no one manages his or her finances so as to deliberately arrive at the point where bankruptcy is a necessary or desirable option. It is not a decision to be taken lightly because it has a lasting impact, both positively and negatively. We are sensitive to how difficult the decision can be and have the experience to know when to advise against filing. Either way, it is important to seek competent legal advice from an experienced attorney before deciding whether to file for bankruptcy.