Chapter 7 Bankruptcy
Under Federal Law there are primarily two chapters of bankruptcy that pertain to individuals: Chapter 7 and Chapter 13. Chapter 7 is what is sometimes referred to as a straight bankruptcy or a liquidation. Under a Chapter 7 case, unsecured debt is “discharged” or eliminated in most instances. This debt can include payday loans, credit card debt, medical bills, personal loans, NSF checks and deficiencies owed on repossessed cars or foreclosures. In order to qualify for a Chapter 7 debt liquidation you must first pass the “means test”. You are not permitted to file a Chapter 7 case if your income is too high. If your income is too high, you may have to file a Chapter 13 case instead.