Chapter 7 Bankruptcy

Chapter 7 Bankruptcy


In a nutshell, a Chapter 7 Bankruptcy is a straight discharge of an individual’s unsecured debt.

If you qualify, you can file a Chapter 7 individually or jointly as a married couple once every eight years under the law.

Unsecured Debts

  • credit card debt
  • medical bills
  • personal loans
  • back leases, etc.

In essence, a Chapter 7 Bankruptcy will get rid of or “discharge” your liability to pay back any unsecured debt (examples above) that is owed on the date the case is filed.

A Chapter 7 Bankruptcy would also protect you from any lawsuits, judgments, or collection activity from such creditors.

Secured Debts

A Chapter 7 bankruptcy would also eliminate the your personal liability on secured debts such as:

  • mortgages
  • car loans

In this context it is often used to protect you from tax liability incurred through actions such as  foreclosure and short sale following the Bankruptcy Discharge. It can also protect you from deficiency balances resulting from vehicle repossession.

In this situation, however, the creditor’s lien survives the Chapter 7 Bankruptcyas does their ability to recover their security instrument. Therefore, many debtor’s will continue to make the payments on their vehicles and mortgages following the Bankruptcy so they can keep their vehicle or property. The debtors are no longer liable to make the payments, however because the lien survived the Bankruptcy they will need to continue to make said payments to retain ownership of the vehicle or property.

For more information on Chapter 7 Bankruptcy please see the IRS Bankruptcy Tax guide and make an appointment for your free consultation with Bankruptcy Attorney Gary Quackenbush- 858-549-8600.

By: Gary A. Quackenbush



This article provides general information about California law. The laws are constantly changing and this article is not intended to provide legal advice about your specific situation. Seek competent legal counsel. Let me advise you about your particular situation.

Gary A. Quackenbush, Esq.