Should You File for Chapter 7 Bankruptcy?

Apr 22, 2021 | Bankruptcy

Chapter 7 bankruptcy – also referred to as liquidation bankruptcy – gives debtors the ability to clear different types of unsecured debts. If you are struggling to make repayments, if your finances seem out of control, or if collectors are calling you persistently, and if you have been through credit counseling, filing for Chapter 7 bankruptcy might be that last resort that can help you get on track with your finances again.

How Does Chapter 7 Bankruptcy Work?

The process starts by you filling out forms and submitting the required documentation surrounding your income, expenses, assets, debt, and tax returns to the bankruptcy court. The court appoints a trustee to oversee your case.

You need to attend a brief creditor meeting as part of the process, where you are required to answer some questions about your case. You are also required to complete a second course in credit counseling. Once this is done, it may take a little over two months for you to receive a court notice notifying you of the acceptance of your plea for discharging your debts.

As an end-result, the trustee might still take over some of your nonexempt property. The ruling will also reflect on your credit report for the next 10 years.

Who Should Consider Filing?

Since you may file for bankruptcy only once every eight years, it is important that you think your decision through. You may consider filing only if any of these preconditions apply to your case.

  • You owe your creditors a lot of money and have substantial assets or income that they might take.
  • You owe your creditors a lot of money and have built equity of around $125,000 in your home. This is the maximum amount you may protect through the homestead exception in most states.
  • You were involved in a road accident while uninsured and ended up losing your driver’s license, which you need again.

What Debts Can and Cannot Chapter 7 Erase?

While Chapter 7 bankruptcy gives you the ability to erase different types of debts, you are still held responsible for some others.


Non-Erasable/Non- Dischargeable

Credit cards

Child support payments

Personal loans and lines of credit

Alimony payments

Auto loans

Student loans

Medical bills

Tax-related debts and government fines

Utility bills

Previous judgments from debt collection and credit card companies

What About Debt Reaffirmation for Secured Assets?

If you wish to hold on to a secured asset such as an automobile or a piece of expensive furniture, you need to reaffirm the debt. However, this might not be the best way forward if you owe more than the worth of the asset, or if you’re dealing with a high interest loan. If you plan to reaffirm a debt with a lender, make sure you discuss it with a bankruptcy attorney first.

Should You Consider Filing Now?

You may consider filing for Chapter 7 bankruptcy if one or more of these points apply to your case.

  • Your dischargeable debt stands at $10,000 or more
  • Your credit score is below 600
  • You are unable to keep up with your day-to-day expenses and diving further into debt
  • You don’t have much in the form of nonexempt assets that the trustee can sell to settle your debt
  • You think you might get sued by creditors or a collection agency
  • You fear wage garnishment
  • You can’t see yourself repaying your existing debt in the next five years
  • You earn less than the median income in your state and can pass the Chapter 7 means test


If you’re still unsure about whether filing for Chapter 7 bankruptcy might work well for you, consider contacting an attorney who specializes in this realm. If you decide to move forward, your attorney can guide you through all the paperwork and also represent you in court, if so required.



    • A Fresh Start: On August 2, 2023, our firm, Morning Law Group, was approved by the United States Bankruptcy Court in the Central District of California to acquire certain of the assets of a law firm formerly known as Litigation Practice Group (“LPG”).
    • New Ownership, New Beginnings: Morning Law Group’s overriding commitment is to provide exceptional service, emphasizing transparency, integrity and client satisfaction. Our operations are completely different from LPG with a laser focus on client service excellence.
    • Past Reviews Do Not IN ANY WAY Reflect Current Practices: We acknowledge the presence of negative reviews stemming from the LPG era. These reviews reflect LPG’s past practices and do not represent Morning Law Group’s standards, ethics, or operations.
    • Commitment to Compliance and Excellence: Morning Law Group operates with the utmost adherence to regulatory compliance and industry best practices. Our team is dedicated to upholding the highest standards in every aspect of our work. To this end, we work closely with a highly-respected legal ethics monitor appointed by the US Bankruptcy Court to ensure we comply with the applicable rules.
    • Enhanced Customer Support and Communication: We have completely different and enhanced customer service protocols to ensure timely, and effective communication by people who are willing to listen. Our clients' satisfaction and trust are paramount.
    • Transparent Operations: Transparency is at the heart of our operations. We encourage clients and potential clients to reach out with any concerns or questions about our services or practices. Our goal is to keep clients fully informed of the status of their matters through regular updates by email and phone. We offer extended office hours to better service our clients (6am – 6pm Pacific Time) and we have a dedicated client services email to facilitate communication.  
    • Continuous Improvement and Feedback: We are committed to continuous improvement and openly welcome feedback. Our goal is to learn, grow and adapt to serve our clients better.
    • Building a Positive Community: Our focus is on building long-term relationships with our clients and the community. We believe in making a positive impact through our work and practices in helping individuals who are fighting debt.
    • A Strong Foundation for the Future: With a solid foundation of ethical practices, skilled professionals, and a client-centered approach, Morning Law Group is poised for a future of success and positive client experiences.