Chapter 7 is the most common form of bankruptcy. In this category, unsecured debts such as credit cards, medical bills, pay-day loans, personal loans, civil judgments, wage garnishments by non-governmental entities, and uninsured property damage claims can be wiped away or discharged.

Once a Chapter 7 case is opened, a court appointed trustee will determine how the case proceeds and what, if any, property may be taken to pay creditors. There are exemption allowances for items such as vehicles, homes, and personal property that protect many from seizure. At Colorado Legal Associates, we can help you determine your status.

In a Chapter 7 Bankruptcy, usually the largest portion of debt is unsecured debt. Unsecured debt means that the underlying loan or money obligation was not secured from a lender through an exchange of a security interest in a car or real estate, which serves as collateral for the loan.

Common unsecured debt includes civil judgments (court judgments), credit cards, pay-day loans, deficiencies that are the result of foreclosure or repossession of collateral property, medical bills, personal loans, or even uninsured property damage.

Federal law requires all creditors who are notified of the bankruptcy filing to stop all attempts to collect debts. This stops creditor calls, threats of law suits or liens, and any pending court actions.

Any wages the debtor earns after the bankruptcy case has begun are the debtor's and creditors have no claim on those earnings. By wiping out most debt, many debtors are able to get back on their feet.

However, if debtors have significant assets they wish to protect such as houses, the attorneys at Colorado Legal Associates often recommend Chapter 13 Bankruptcy.

Clients who are thinking about filing any form of bankruptcy should take responsible steps to avoid increasing their indebtedness. This means that use of credit cards should cease and no new loans or other financial obligations should be undertaken.

Call us today for a free consultation, so we can help you determine if a Chapter 7 Bankruptcy is right for you.