CHAPTER 7 BANKRUPTCY - Chapter 7 Bankruptcy is commonly known as a liquidating bankruptcy. Out of the three main types of bankruptcy individuals use (chpt 7,11,and 13), Chapter 7 bankruptcy allows individuals to discharge their debts, while retaining their exempt property. The concept of Chapter 7 Bankruptcy is that all of a Debtor's non-exempt property becomes property of the bankruptcy estate and is liquidated by the bankruptcy trustee. The individual typically chooses what assets or property to declare as exempt, within the amount of their total exemption. Ex: If you have a $4,000.00 dollar exemption, then you would declare what clothes, jewelry, cars, etc... would fall under that exemption (usually). However, you may still retain property outside the exemption by doing a "buy back" plan, or a reaffirmation agreement.
Therefore, in most cases, a Debtor can file Chapter 7 and retain possession and ownership of his or her property. In Chapter 7, the Debtor receives a discharge which eliminates credit card debt, medical bills, and other similar debt, plus debts secured by vehicles, real or personal property or other assets surrendered to the Debtor's secured creditors. A Debtor may have the option of retaining possession of assets (such as a vehicle) securing a Creditor's claim, provided the Debtor agrees to continue paying the debt secured by the asset the Debtor desires to keep.
