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Chapter 7 Bankruptcy

Chapter 7 bankruptcy is sometimes called "straight" or "liquidation" bankruptcy -- it cancels your debts, but you might have to let the bankruptcy court liquidate (sell) some of your property for the benefit of your creditors. ("Chapter 7" refers to the chapter of the federal Bankruptcy Code that contains the bankruptcy law.)

You won't be able to use Chapter 7 bankruptcy if you already received a bankruptcy discharge in the last six to eight years (depending which type of bankruptcy you filed) or if, based on your income, expenses, and debt burden, you could feasibly complete a Chapter 13 repayment plan.

Filing for Chapter 7 bankruptcy puts into effect an "Order for Relief" -- known informally as the "automatic stay." The automatic stay immediately stops most creditors from trying to collect what you owe them. So, at least temporarily, creditors cannot legally grab ("garnish") your wages, empty your bank account, go after your car, house, or other property, or cut off your utility service or welfare benefits.

At the end of the bankruptcy process, all of your debts are wiped out (discharged) by the court, except:

  • debts that automatically survive bankruptcy, such as child support, most tax debts, and student loans, unless the court rules otherwise, and
  • debts that the court has declared nondischargeable because the creditor objected (for example, debts incurred by your fraud or malicious acts)

 

For a free consultation about bankruptcy, contact us toll-free at (800) 775-1820. We are available to represent people in DuPage County and the surrounding parts of Illinois, including Will, Cook, Kendall, Kane, Kankakee, Lake, McHenry, LaSalle and Grundy Counties.