Did you know that the right to bankruptcy is a constitutional right? It is also complex body of law, with certain state-by-state variances, and can only be safely and efficiently navigated with the assistance of an experienced advocate.

Are you feeling overwhelmed by credit card debt and unsecured loans?  Do you want to stop creditor harassment, lawsuits, and sheriff sales of your personal property?  If so, you might be an excellent candidate for Chapter 7 bankruptcy.  The bankruptcy attorneys at the Law Offices of Turner & O’Connell, in Harrisburg, Pennsylvania, can assist you in deciding whether filing for Chapter 7 bankruptcy is the best option for you.

The following is intended to provide you with a general overview of Chapter 7 bankruptcy, and related issues.  Please contact us to discuss your unique situation.

To schedule a consultation with a Pennsylvania bankruptcy lawyer, contact us today.  Both of our offices are handicap accessible and have free parking.

The Law Offices of Turner & O’Connell, located in Harrisburg and Newport, Pennsylvania, represent Chapter 7 bankruptcy clients throughout central Pennsylvania, including Cumberland County, Perry County, and the communities of York, Lewistown, Lebanon, State College and surrounding areas.

Chapter 7 - An Overview

Both individuals and businesses may find themselves with more debts than they can pay when due. In such cases, filing for bankruptcy may provide a solution to what seems like an insurmountable problem. Bankruptcy provides two basic forms of relief: (1) liquidation and (2) rehabilitation, also known as reorganization. Most bankruptcies filed in the United States involve liquidation, which is governed by Chapter 7 of the Bankruptcy Code. An attorney can advise individuals and businesses about whether Chapter 7 is the right choice for them. The bankruptcy lawyer's goals are to help Chapter 7 debtors make a fresh start and ensure that creditors are paid.

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Bankruptcy Abuse Prevention and Consumer Protection Act

On April 20, 2005, President Bush signed the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), which instituted substantial changes to the Bankruptcy Code. Most provisions of BAPCPA became effective in October 2005. BAPCPA's provisions make it more difficult to file for Chapter 7 and impose many additional requirements on debtors in an effort to exclude debtors who can pay their creditors from Chapter 7. Under the amendments to Section 707(b), a bankruptcy case should be dismissed if the debtor is found to be "abusing" Chapter 7 relief. Prior to the BAPCPA, the word "substantially" was included immediately before "abuse" in the test. If you are considering filing for Chapter 7 bankruptcy and have questions about whether you will qualify, talk to a bankruptcy lawyer.

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Discharge Under Chapter 7

"Discharge" in the bankruptcy sense refers to clearing the debtor's slate of all, or most, past debts. Although many people expect that filing for bankruptcy will wipe out all of their debts, that is not always the case. Bankruptcy only discharges certain debts. The availability of discharge depends on the type of bankruptcy proceeding involved, who the debtor is and what type of debts the debtor has. An experienced bankruptcy attorney can advise clients about which debts will be discharged by a Chapter 7 bankruptcy and which debts will remain.

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Exempt vs. Non-exempt Property Under Chapter 7

In a Chapter 7 liquidation case, the debtor must relinquish certain property to the bankruptcy trustee so that he or she can sell the property and use the proceeds to pay off debts. Property of the bankruptcy estate is broadly defined under Section 541 of the Bankruptcy Code. The estate is technically the legal owner of all the debtor's property and consists of all legal and equitable interests that the debtor has in property at the initiation of the bankruptcy case. Income that the debtor earns after the date of the petition is not included in the estate. Debtors, whether they are businesses or individuals, are often justifiably concerned about what property they will be allowed to keep and what they must give up. An experienced bankruptcy lawyer can answer these and other questions, allay fears and keep the process moving forward as painlessly as possible.

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Alternatives to Chapter 7 Bankruptcy

The term "workout" is used to describe a non-bankruptcy negotiated modification of debt. More simply stated, a workout is an out-of-court agreement between a debtor and his or her creditors for repayment of the debts between them, which is negotiated without all the procedural complications — and perhaps the stigma — of the bankruptcy process. Lawyers experienced in bankruptcy and debtor-creditor law can advise both debtors and creditors on whether a non-bankruptcy workout is their best course of action.

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Chapter 7 Resource Links

American Bankruptcy Institute Consumer Corner
General information regarding debt and bankruptcy.

Chapter 7
Information about Chapter 7 from Mortgage101.com.

United States Code — Chapter 7 Bankruptcy
The federal bankruptcy laws from Cornell University.

Legal Information Institute
A general overview of the topic of bankruptcy, along with state and federal materials, from Cornell University.

FindLaw Forms
Includes forms for local bankruptcy courts.

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Frequently Asked Questions about Chapter 7

Q: How does Chapter 7 liquidation work?

A: In a Chapter 7 case, the debtor must relinquish his or her nonexempt property to a bankruptcy trustee, who then converts the property into cash by selling it and pays the debtor's creditors from the sale proceeds. In return, the debtor receives a Chapter 7 discharge of certain debts if he or she is eligible for such a discharge, pays the filing fee, completes a personal financial management course and obeys the court's directives.

Q: Are all debtors automatically eligible for a Chapter 7 discharge?

A: No. A debtor may not be eligible for a discharge under Chapter 7 if he or she has been granted a discharge in a Chapter 7 case within the last nine years. Debtors who engage in certain fraudulent conduct related to the bankruptcy or their financial situation also may not be eligible for discharge. In addition, if the debtor refuses to answer questions or obey orders of the bankruptcy court, the court may refuse to grant a discharge.

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