What Chapter 7 usually does

Filing Chapter 7 generally triggers the automatic stay, which stops most collection activity while the case is pending. A discharge can eliminate personal liability on many credit cards, medical bills, payday loans, personal loans, and other unsecured debts.

Do you qualify?

Income is one part of the analysis. The means test uses average income over a statutory lookback period and compares it with applicable median-income figures, then may require a second calculation. Prior bankruptcy discharges, recent transfers, business ownership, tax debt, and available assets can also change the analysis.

What happens to your property?

Chapter 7 does not mean “the court takes everything.” Exemption law protects categories of property, while the trustee looks at nonexempt value that could benefit creditors. We use current Utah exemption amounts instead of hard-coding numbers that go stale on a website.

What about the house and car?

For secured property, there are two separate questions: whether the bankruptcy trustee has an interest in your equity, and what rights the lender has under its lien. A current car loan may involve reaffirmation, redemption, surrender, or a limited ride-through situation. A mortgage lien generally survives Chapter 7 even if personal liability is discharged.

Read: Can I keep my car?

What not to do before filing

• Do not transfer a house or vehicle to a relative to “protect” it.
• Do not drain retirement funds to pay ordinary unsecured debt without getting advice first.
• Do not run up cards, take cash advances, or hide accounts.
• Do not assume an old exemption number from Google is still current.

General information only; not legal advice. We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.