Chapter 7 Bankruptcy is often referred to as a liquidating bankruptcy and can be filed by both consumers and businesses. However, businesses rarely file Chapter 7 because the owner has guaranteed the business debts and is the one that needs to file the bankruptcy. The premise of Chapter 7 is simple: the debtor lists all assets, liabilities, and transfers for a trustee to review to determine if there are any assets that can be utilized to pay the debtor’s creditors. The trustee is not going to help you protect your assets and is not your friend. The trustee is incentivized by receiving a commission for locating any property that can be sold to pay creditors.
In addition, Chapter 7 is a maze of do’s and don’ts that, unless you are familiar with the laws, can be very perplexing and used by the trustee to sell your assets. Just a small sample of the complexities involved in a Chapter 7 bankruptcy: (1) determining what assets may be subject to sale by the trustee, (2) properly filed exemptions to protect your property, (3) families, friends and creditors may be sued by the trustee for payments or transfers received from you, (4) income limits must be analyzed, (5) the ability to avoid judgments on your property, and (6) determining what debts can be discharged, to name a few examples.
While liquidation may sound like a bad deal, most people do not have assets with value that a trustee can sell. Generally, there are secured debts on the most valuable assets, for example a mortgage on a house or a car loan on a vehicle. Beyond these secured debts, individuals are entitled to exempt certain property. What this means is that in most cases a person can file Chapter 7 and keep their house, car, and personal items, all while ridding themselves of the credit card, medical, and personal loan debt dragging them down.
EGH has experience in guiding you through the Chapter 7 maze. Bill Kroll worked as a law clerk in the Bankruptcy Court for the Eastern District of North Carolina, is a Board Certified Specialist in Business and Consumer Bankruptcy, and has focused his practice on bankruptcy since 2009. Call EGH to schedule your free consultation.
Phone (919) 755-0025
