Chapter 7 Bankruptcy

Chapter 7 is a “liquidation” bankruptcy, in which all unsecured debt is discharged. Unsecured debt includes medical bills, credit card debt, and loans that are not secured by property. Certain types of debt are not dischargeable in a Chapter 7, including past-due child support, student loans, and some type of taxes.

Usually, if people are current on their home mortgage payments, and do not owe a lot more on their home than it’s worth, they will opt to keep their house, continue making mortgage payments, and file bankruptcy only on the unsecured debt. If they are in arrears and want to keep their home, it is necessary to file a Chapter 13 payment plan.

Because the Chapter 7 bankruptcy trustee’s main job is to collect assets, he will ask the debtor what he owns and owes, what he earns and spends. Most often, the earnings of the debtor do not present a problem, except to require that he go to a payment plan, such as a Chapter 11 or a Chapter 13. The most common problem in a Chapter 7 is that the debtor has too much in assets. A typical example would be to own a quite average house with no mortgage payments, which is considered “free and clear”. Investments which are not tax-exempt can also create problems. Because there can be so much to lose, the average consumer, the white-collar professional, and the small businessman are all encouraged to see legal counsel before deciding on these matters. If you have any additional questions or you’d like to schedule an appointment, just call us at (317) 266-8888 or email Mike at

Note: We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.

Indianapolis Small Business and Consumer Protection Attorney: bankruptcy, debt settlement, and student loan relief