Chapter 7 wipes out many (or most) of your debts quickly and allows you to keep “limited” amounts of your property. The limits can be quite generous or everything you have though.
In most cases, it stops garnishments, lawsuits, and harassment permanently. It also stops repossessions and foreclosures temporarily, but, in many cases, not permanently. Chapter 7 is a good solution for medical bills, credit card/department store debts, some old taxes, and most other unsecured debts. It is usually not a good solution if you are behind on your mortgage or your car payments.
If the Relief you need is available through Chapter 7, it is preferable to Chapter 13, because it is fast, there are no payment plans to monitor, there are no trustee’s fees to pay, and the attorney’s fees are less. But the relief is more limited than in Chapter 13.
1) Your problems are things like medical bills, credit cards, and department store charges; and/or,
2) You owe old, filed and assessed income taxes (over three years old); and/or,
3) Your income is “average” or below average and only seems to cover the necessities for your household; and
4) You rent, your house is heavily mortgaged or has $15,000 or less of equity (or a smaller amount for a mobile home); and/or,
5) Your cars are worth less than $3,000 or are heavily financed; and,
6) You are current on your house and car payments,
then Chapter 7 might fit you. And it fits more than half of the people who hire us.
There are income-based limits on who may qualify. We recommend always exploring the possibility of a Chapter 7 before considering other options because it’s quicker and cheaper in most cases.