Chicagoland Chapter 7 Bankruptcy Attorneys
Chapter 7 is the “fresh start” provision that allows you to discharge (“wipe out” or “erase”) most of your unsecured debts and start over. Some debts, like student loans, certain taxes and domestic support obligations, cannot be wiped out.
In exchange for the fresh start from creditors, however, you have to surrender to a “bankruptcy trustee” all of your property that has value to creditors. You are allowed to keep a certain amount of “exempt” property. Any property, including a house, that is subject to a mortgage or a lien often cannot be sold by a bankruptcy trustee because there is no equity in the property, particularly after considering the exemptions that apply to that property.
If, after taking your exemptions, there is no property with equity value that can be liquidated to pay creditors, then the bankruptcy trustee prepares what is called a “no asset” report. In that circumstance, a person is able to retain their property. This includes a house, although you will still need to reach an acceptable agreement with the mortgage lender outside of bankruptcy.
Chapter 7 cases can take between 3-4 months or longer, depending upon how quickly a Chapter 7 candidate is able to prepare the necessary paperwork, whether the candidate has assets that a “trustee” can sell or whether the trustee files a “no asset” report, and whether creditors challenge the right to a discharge.
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