Chapter 7 is sometimes called 'straight bankruptcy'. The actual title in the Bankruptcy Code for Chapter 7 is 'Liquidation'.
This is the Chapter where you eliminate all of your debts, with some exceptions.
The common exceptions are income taxes, student loans and child support.
You can file individually or a joint case with your spouse. Other co-signers are not protected.
You keep all property which you are able to claim 'exempt' under a different list for each state.
Collateral loans like home mortgages and car loans can also be included but you have certain choices;
You can keep paying & keep the item (reaffirm), or you can give it back & not owe any balance (surrender), or buy the item at it's actual value & not owe any balance (redeem)
If your household income exceeds the average income for your state a formula is used (means test) to see if the case should be dismissed for 'abuse'. (since 10/05)
The court filing fee is $335 collected by the attorney and paid to the court clerk. Two credit counseling sessions are required which cost less than $50. These can be done on the phone or computer.
Attorney fees add another $650 to $1050 with most cases in the $650 to $750 range.
The lowest total fees and costs are around $1,000.00. Terms are usually two-thirds down, balance at the trustee meeting, a month or two later.
The case is open for about 4 months after which the court clerk mails out the 'discharge of debtor'
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