BANKRUPTCY
The Law Offices of MAGYAR & RAUCH, PLLC
CHAPTER 7: Liquidation

1. Chapter 7 is designed for debtors in financial difficulty
who do not have the ability to pay their existing debts.  
Debtors whose debts are primarily consumer debts are
subject to a “means test” designed to determine whether
the case should be permitted to proceed under chapter 7.
If your income is greater than the median income for your
state of residence and family size, in some cases,
creditors have the right to file a motion requesting that the
court dismiss your case under § 707(b) of the Code. It is
up to the court to decide whether the case should be
dismissed.

2. Under chapter 7, you may claim certain of your property
as exempt under governing law. A trustee may have the
right to take possession of and sell the remaining property
that is not exempt and use the sale proceeds to pay your
creditors.

3. The purpose of filing a chapter 7 case is to obtain a
discharge of your existing debts. If, however, you are
found to have committed certain kinds of improper
conduct described in the Bankruptcy Code, the court may
deny your discharge and, if it does, the purpose for which
you filed the bankruptcy petition will be defeated.

4. Even if you receive a general discharge, some
particular debts are not discharged under the law.
Therefore, you may still be responsible for most taxes and
student loans; debts incurred to pay nondischargeable
taxes; domestic support and property settlement
obligations; most fines, penalties, forfeitures, and criminal
restitution obligations; certain debts which are not properly
listed in your bankruptcy papers; and debts for death or
personal injury caused by operating a motor vehicle,
vessel, or aircraft while intoxicated from alcohol or drugs.
Also, if a creditor can prove that a debt arose from fraud,
breach of fiduciary duty, or theft, or from a willful and
malicious injury, the bankruptcy court may determine
that the debt is not discharged.