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Chapter 7 Eligibility

A petitioner must reside in or have a domicile, a place of business, or property in the United States in order to file a Chapter 7 bankruptcy. The petitioner must not have been granted a Chapter 7 discharge within the last six years or completed a Chapter 13 plan.

Secured Claims and Liens

Secured claims include liens, security interests, security agreements, and secured claims. An allowed claim secured by a lien on property in which the estate has an interest, or that is subject to setoff, is a secured claim to the extent of the value of the creditor's interest in the estate's interest in the property or the amount subject to setoff. A secured claim carries the right to adequate protection of collateral. Unavoided liens survive bankruptcy but circumstances may demand action by a secured creditor to protect the lien.

Unsecured Claims

Unsecured debt may be generally described as a debt where credit was granted based solely upon the promise or ability of the debtor to pay. Claims that are not secured by any collateral or subject to setoff are generally unsecured claims. For purposes of bankruptcy, unsecured claims are classified and paid based on a priority list described in the Bankruptcy Code. Each class must be paid in full before the next lower class is paid anything.

Creditor Attempts to Collect Discharged Debt

A debt no longer exists after it is discharged in bankruptcy. The court enters an order prohibiting the debtor's creditors from later attempting to collect any discharged debt from the debtor.

Treatment of Property Settlement Claims

Certain property settlements are not dischargeable in a Chapter 7, 11 or 12 bankruptcy case, but remain dischargeable in Chapter 13 cases. Support, alimony or maintenance that is incurred by the debtor in the course of a divorce or separation or in connection with a separation agreement, divorce decree or other order of a court are generally not dischargeable.