Jump to Navigation

What benefits does Chapter 7 bankruptcy protection offer?

Bankruptcy often gets a bad rap, not just here in the metro D.C. area and Maryland, but also throughout the rest of the country. Despite public misconceptions, bankruptcy remains an effective and legal way to pay off debts and find a fresh financial start. Chapter 7 bankruptcy, in particular, is an excellent way to achieve debt relief.

What are the benefits of a Chapter 7 bankruptcy filing? Also known as liquidation bankruptcy, Chapter 7 provides a viable way to discharge eligible debts. It uses a filer's existing assets and property to pay off the debts, without losing everything. Only court-designated assets are liquidated. Another benefit of Chapter 7 is that it ends most creditor harassment. Once a filer has entered into bankruptcy, creditors are no longer legally allowed to demand payments. Filers are also safe from wage garnishment.

What are the requirements to file for Chapter 7 bankruptcy? All applicants must undergo a means test. This assessment determines whether the applicant's income exceeds the state's average income. Any applicant who has an income over the limit is not eligible to file for bankruptcy. Two other requirements are that an applicant should not have previously filed for bankruptcy and he or she cannot have been denied a bankruptcy filing within 180 days of the new filing. Applicants also must undergo mandatory credit counseling.

Will D.C. and Maryland bankruptcy applicants go through the process by themselves? No. In a Chapter 7 filing, a bankruptcy court appoints a trustee to take charge of the liquidation process and important related matters. District of Columbia and Maryland applicants can also seek assistance from bankruptcy professionals to help them meet the filing requirements and understand the details of the bankruptcy process. These professionals can give sound advice about how filers can handle their finances more efficiently during and after bankruptcy.

Source: United States Courts, "Liquidation Under the Bankruptcy Code," accessed Jan. 13, 2015

No Comments

Leave a comment
Comment Information
Start Right Now

Bold labels are required.

Contact Information

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

Visit Our Bankruptcy Law Website Subscribe to This Blog's Feed
Office Locations

1115 Massachusetts Ave NW,
Washington, DC 20005
Phone: 202-559-1428

10512 Pohick Court,
Fairfax Station, VA 22039
Phone: 703-550-7030

6926 Seven Locks Road,
Cabin John, MD 20818
Phone: 301-890-4500

Toll-Free: 877-441-4076
Fax: 202-638-5858

Twitter link