Guidelines On Chapter 7 Bankruptcy Process

Three Considerations To Think About: Should You or Should You Not File For A Chapter 7 Bankruptcy

It’s important, before someone decides to file for Chapter 7 bankruptcy protection, if doing so will make financial sense. If you’ve been thinking about it, how do you know that it’s right for you? There are three questions you need to ask yourself.

1 – Are you judgment resistant? Are your creditors lawfully barred from getting any income or property you have even if you don’t file for the Chapter 7 bankruptcy?
2 – Is there enough debt to be discharged under Chapter 7 bankruptcy to make it worth doing?
3 – Do you have to release any property you would like to keep?


Based upon the answers you give for the above three questions, you may or may not find that a Chapter 7 bankruptcy is the best move for you.

1 - Are You Judgment Resistant?

The majority of unsecured creditors must get a court judgment before they can begin collection procedures like wage garnishments or personal property seizure. The only exceptions are student loans, child support and tax collections.

If the debts you have are the kind that entails a judgment, the next question you should ask yourself is whether or not you’ve got property or income they can seize if they decide to seek out a judgment. For example: if every bit of the income you have is from Social Security, which creditors cannot touch, and your property is exempt, creditors are not allowed to touch your things to get their judgment satisfied. Thus, you are judgment resistant.

You may want to wipe the slate clean by filing for a Chapter 7 bankruptcy. However, if you don’t, nothing is going to happen… regardless of the amount you owe.

2 – Is There Enough Debt To Be Discharged Under Chapter 7 Bankruptcy To Make It Worth Doing?

There are certain types of debt that a Chapter 7 bankruptcy cannot get rid of. If much of your debts are non-dischargeable debts, there’s no real point to file for the Chapter 7 bankruptcy. Dischargeable debts include:

- Alimony obligations
- Back child support obligations
- Student loans – unless your repayment will cause extreme hardship
- Income taxes – for taxes that are no more than three years old
- New/recent debt – over $550 to a creditor within 90 days, $825 for cash advances within 70 days before you can file for Chapter 7 bankruptcy.
- DUI court judgments due to a death or injury

A bankruptcy judge may decide that some debt is non-dischargeable if your creditor objects to it in open bankruptcy court.  These kinds of debts are:

- Debts that come about because of fraud – lying on credit card application, writing bad checks
- Debts that cause malicious/willful injury to someone or something else
- Debts from larceny, embezzlement or breach of trust
- Debts that come from divorce decree that are not the non-dischargeable alimony and/or support.

If a good chunk of your debs can be objected to, you might still want to consider filing for a Chapter 7 bankruptcy. Of course, it would be nice if they don’t object.

Co-Debtors and Your Debt

Any time a person decides to co-sign something for you, they’re also on the hook for the debt. Should you decide to file for Chapter 7 bankruptcy and your co-signer doesn’t, you’ll get the debt discharged but your co-debtor will still be on the hook for it.