Chapter 7 is the most common form of personal bankruptcy filing in the U.S., and you might have heard it called “straight” or “liquidation” bankruptcy. It is a great option for Americans with more debt than they can afford to find much-needed relief.

If you plan on filing Chapter 7 bankruptcy, we recommend you seek the assistance of an experienced Brownsville bankruptcy lawyer at the Law Offices of Phillippe and Associates. While it is possible to file Chapter 7 on your own, legal assistance can help ensure you get the most out of the process.

Chapter 7 Basics

Chapter 7 is often called “liquidation” bankruptcy for good reason. Filing for Chapter 7 usually requires debtors to surrender the majority of their property in exchange for the court’s loan forgiveness. This allows them to discharge their debts.

However, the property that is liquidated will be sold to pay off those debts. The good news is, there are many exempt items that you will be able to keep through the process.

Chapter 7 Eligibility

One component of Chapter 7 bankruptcy that makes it a challenge for some debtors is the means test. The means test determines whether or not you are eligible for Chapter 7 based on your income, assets, and what you owe.

The means test is meant to limit filers to only those who are truly struggling to pay their debts. Those who are rejected due to a means test failure, on the other hand, may be better served by Chapter 13.

What Happens After You File

Immediately after you file, you will be assigned a case number and a bankruptcy trustee. The bankruptcy trustee is charged with overseeing your case. They will check that all of your forms are accurate and complete and may request further information. The trustee will also oversee the meeting of creditors.

As soon as you file, the court will initiate an automatic stay on your debts. This will prohibit creditors from seeking repayment against you. They will no longer be able to seek payment for credit card debts, utilities, medical bills, unsecured debt, personal loans, or other types of debt. Any bank account freezes, wage garnishments, or creditor lawsuits against you will be halted.

How Will Chapter 7 Affect Your Life?

Both Chapter 7 and Chapter 13 will show up on your credit report for some time after your file for them. For Chapter 7, your credit report will show your filing for ten years. This means that your credit score will be lowered due to your filing. A decrease of between 100 and 200 points can be expected, but how high or low the amount depends on your credit score prior to filing.

Chapter 7 won’t permanently ruin your credit, though. You can begin rebuilding your score as soon as your debt is discharged. All of your discharged accounts will show a zero balance. At that point, it will be up to you to get credit and use it wisely. Many people are able to improve their scores within one or two years of filing Chapter 7.

Your Chapter 7 Bankruptcy Lifeline: the Law Offices of Phillippe and Associates

Chapter 7 can change your life for the better. Discharging your debts helps establish a clean slate on which you can rebuild your financial future. Getting out from under monthly payments and late fees that you cannot afford can give you the breathing room you need.


If you’re struggling to make ends meet over mountains of debt, contact the Law Offices of Phillippe and Associates to learn about your bankruptcy options today.


Book a FREE Consultation