Why do we call bankruptcy Chapter 7?

Very few people know why the type of personal bankruptcy that eliminates a persons debts is called CHAPTER 7.  Well, here's the answer.  There is huge volume of books that contain all of the laws that our Federal Government passes.  Those books are called the United States Code.   That Code has TITLES, and within those TITLES are CHAPTERS.  TITLE 11 of the United States Code is all about bankruptcy, and is sometimes called by bankruptcy code.  Within TITLE 11 is Chapter 7, which is called  the "Liquidation" section of TITLE 11 of the United States Code.  Chapter 7 Liquidation means that in exchange for liquidating all of your property (with exemptions that usually means that you get to keep everything you own), you are permitted to discharge, or eliminate your unsecured debts in Chapter 7.  Chapter 13 and Chapter 11 are other Chapters of TITLE 11 of the United States Code, and they will be discussed elsewhere. Click below if you would like to see all of Chapter 7 as actually written … [Read more...]

What is Personal Bankruptcy Discharge?

What is a bankruptcy discharge? The typical consumer files a bankruptcy case in order to obtain a "discharge" of overwhelming debt. An unfortunate word that is used to describe what for many is a life changing "event". Why? When a debt is "discharged", the obligation of the debtor to pay it, no longer exists. The obligation is simply gone...poof. It is government intervention in the realm of private contract relationship at it's "finest", and with some careful planning and preparation, it works like a charm. Now, having said that, this powerful discharge has it's limits. It isn't perfect. 1. It doesn't deal with every debt. some debts cannot be "discharged" by statute, like child support, newer income tax debt, spousal maintenance etc. 2. Even though the personal liability may no longer exist as a result of the "discharge", liens recorded against the debtor's property, may survive the bankruptcy unless they are modified or removed. 3. You can't get very many of them too … [Read more...]

Glossary of Bankruptcy Terms

Bankruptcy terms can be difficult to understand.  Below are brief definitions of the terms used in this site and in the Bankruptcy Code. If you have any questions, please feel free to contact us. 410-766-4044. Adequate protection:Payment to a secured creditor to protect the value of the creditor's lien during the bankruptcy proceeding from loss due to depreciation or non payment of a senior lien. Adversary proceeding: A lawsuit filed in the bankruptcy court which is related to the debtor's bankruptcy case. Examples are complaints to determine the dischargeability of a debt and complaints to determine the extent and validity of liens. Assets:Assets are every form of property that the debtor owns.  They include such intangible things as business goodwill; the right to sue someone; or stock options.  The debtor must disclose all of his assets in the bankruptcy schedules; exemptions remove the exempt assets from property of the estate. Automatic stay: The injunction issued … [Read more...]