Chapter 7 bankruptcy is a total liquidation of an individual’s assets. This means that all debt is forgiven or discharged. In exchange for this debt forgiveness, any assets that a person has could be subject to liquidation. Essentially this means that a person filing for Chapter 7 bankruptcy could have some assets taken from them, sold, and the proceeds of the sale would be used to pay back creditors. Not all assets are subject to this liquidation. Some assets are exempt from this process, in that you can keep them if you file for Chapter 7 bankruptcy.
The following is a list of the most common exemptions and their monetary amount:
- Primary Residence – $125,000 (effective 3-27-13)
- Automobile – $3,400
- Personal Property $10,775 – (aggregate)
- Cash/Money on Deposit – $425.00
- Retirement Accounts (401(k)/403(b)) – 100% exempt
- IRAs – 100% exempt
(This list of exemptions is adjusted frequently for inflation and therefore subject to change.)
There is also an income component to filing for Chapter 7 bankruptcy. Generally speaking, a person (or married couple) seeking to file a Chapter 7 bankruptcy must make less income than the average household of a similarly-sized household. The average income numbers change frequently, based on inflation. Consult with one of our bankruptcy attorneys for a free consultation to determine eligibility. The following information is the median household income per family size in Ohio for cases filed after November 1, 2012:
|Size of Household||Median Household Income|
*add $7,500.00 for each individual in excess of 4
A person filing a Chapter 7 bankruptcy is typically only required to make one appearance at the bankruptcy court. The hearing is conducted by a bankruptcy trustee, not a judge. The trustee is someone appointed who is kind of a middle person between a debtor and their creditors. The trustee’s will review the bankruptcy paperwork to see if there are any assets that might be able to be liquidated.
The majority of people who file a Chapter 7 Bankruptcy do not lose any assets. Cases typically last between four to five months. The purpose of Chapter 7 bankruptcy is to provide a fresh start for consumers.
Call now to schedule a free initial consultation with one of our bankruptcy attorneys to learn more about Chapter 7 bankruptcy and whether this might be a viable option for you.