What is Chapter 7 Bankruptcy

Hello, my name is Jeff Kelly, I'm a bankruptcy attorney in the Northern District of Georgia, and today, I want to talk about Chapter 7, what is it, what can we wipe out, what can we not wipe out, many people I'd refer to chapter 7 is the Fresh Start provision of the Bankruptcy Code, basically, it allows you to wipe out your debt, move on, and get a new start with life.

Let's say, you have a house, and let's say, you're underwater. The house is worth way less than what you owe, and let's say, you have a first mortgage, in a second mortgage, and you're worried about this stuff hanging over you, well, Chapter 7, allows you to surrender the house, we can wipe out both those mortgages, let's say you have a huge pile of medical bills, oftentimes, we'll have clients come in, and through no fault of their own, they've been through a medical tragedy, and they're just left with this enormous amount of medical debt, that they cannot handle, Chapter 7, allows you to wipe that debt out, same thing with credit cards.

Now, there are some types of debt that, we can't wipe out, as a general rule, you cannot wipe out student loans, however, there is an exception of the bank tree code, in hardship situations, some people can, but those situations are extremely rare, in most cases, you know, if you're working, you've got a job, you're earning income, more likely, you're going to get stuck having to repay those student loans, hopefully Congress will change that in the near future.

Taxes are a type of debt, some types of taxes we cannot eliminate, let me give you an example of what you can, what you can't. Let's say, you have filed your tax return, more than three years ago, let's say there's no tax lien filed against you, we'll be able to wipe that tax debt out, because, it's more than three years old, I'm assuming, it's income taxes now, let's change it around a little bit. Let's say it's a different type of taxes, let's say it's Georgia sales tax, well, that's the type of debt you're not going to be able to wipe out, because technically, if you are an owner of a business, and you are collecting sales tax, technically, Georgia considers that to be their money, and you're just holding it in trust for them, so sales tax, as a general rule, we're not gonna be able to get out of that one, income tax maybe.

Now, if the tax set is less than three years old, you're going to be stuck having to pay that back. So, how do you determine how old the tax is?. Depends on when you have filed your tax return, and unfortunately, a lot of people that come in to meet with me, that have tax issues, they have not filed their tax return in years, so let's say you owe taxes from the Year 2005, and you just filed the return yesterday, well, that debt is considered one-day-old, because you just filed the return, so, tax issues are very complicated, you know, it depends on the situation.

I'd be happy to sit down with you and take a look. Other types of deb,t that you cannot wipe out in Chapter 7, let's say you've got somebody, and they know they're in economic trouble, and they go out and they just run the credit cards through the roof, and now they're gonna breeze them in file Chapter 7, that's not going to happen, you can't do that. Debts that have been incurred, very close to your filing date, the creditors gonna fight, you can't do that. Chapter 7 is for people who have gotten into some trouble, through no fault of their own, they've had some job loss, sometimes people go through a divorce, things like that, things that are beyond your control.

But if somebody, is intentionally trying to take advantage of the system, they're going to get in trouble. But if you have any questions at all, please don't hesitate to give me a call at (188) 832-8249 you can also call us on our main number at (706) 295 0030 and I hope you'll check out my website www.kellycanhelp.com
and also we have a podcast website www.kellybankruptcy.com you can download our podcast to your iPhone and I hope you will check it out!

Thank you!.