A Chapter 7 bankruptcy is often referred to as a straight BK because you normally have no assets to speak of or do not qualify for a payback plan like you see under a chapter 13.

People who file for chapter 7 bankruptcy usually claim all debts in the proceeding and walk away clean. A chapter 7 can mean “no assets” and usually consists of credit card debt and medical bills. Many people are forced into a bankruptcy from medical bills piling up and no health insurance. It’s tragic that it has to be this way in the United States.

If you do own assets but have no way of repaying your creditors, even a portion, the court will usually evaluate how many assets you have and if they can cover any of your debts. Credit card bills obviously have no collateral attached to them so they are often the cause of a BK 7 as well.

If you own a car dont feel like the court is going to force you to sell it to pay your creditors back. A person has to have a way to get to work. If however you have cash, assets, multiple vehicles or property, that will be taken into consideration for the type of bankruptcy you qualify for.

Often times a bankruptcy filing is a last resort but if creditors start hounding you non-stop or you’re being sued then bankruptcy can protect you and put a stop to collections. During a bankruptcy petition, there is an automatic stay that forbids creditors from coming after you.

What Happens to a Deficiency Balance in a Chapter 7 Bankruptcy

If your bankruptcy is successfully filed and discharged (not dismissed), you will not owe any deficiency balance in a chapter 7. The debts are wiped away.

Of course, each case is a separate situation so discussing your options with a bankruptcy attorney is suggested. He can explain to you about the Bankruptcy Means Test & Debtor Education that is required.