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Mark Sciblo, P.C.

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Chapter 7 Bankruptcy

Finding yourself in a situation, where for whatever reason one is not able to pay his or her financial obligation, is one of the most difficult challenges a person can face. Considering filing for chapter 7 bankruptcy comes often burdened with a feeling of inadequacy.

At The Law Offices of Mark Sciblo, P.C. having helped hundreds of clients to file for chapter 7 bankruptcy, we understand how difficult it may be for you to even phone a lawyer, and inquire about bankruptcy. We offer a free first consultation and face time with a lawyer.

We urge people considering filing for bankruptcy relief, to seek a legal advice as soon, as you realize your debts are mounting, and you are not quite sure how you will be able to deal with them. The recession, unfortunately brought too many bankruptcies around: acquaintances, neighbors and friends may have filed for bankruptcy that you know of, but we caution to use them as  a source of information.

Everyone’s financial situation is different, but only an attorney will be able to assess your situation, and give you the best advice. Even if you filed for bankruptcy yourself previously, your experience may not be typical. The bankruptcy law was changed on October 17, 2005 implementing the new bankruptcy abuse prevention and consumer protection act (the BAPCPA). In general bankruptcy law is a federal law. The information below is not complete.

We urge you to seek legal advice. One can choose the kind of bankruptcy that best meets your needs.


Chapter 7 bankruptcy is also referred as ‘liquidation bankruptcy’ or ‘straight bankruptcy’. It is a liquidation process in which the debtor’s non-exempt property or assets are sold by the trustee. Any proceeds that are obtained by the chapter 7 trustee, are then turned over to creditors according to the priorities mentioned in the Code. Chapter 7 is the simplest and easiest form of bankruptcy proceeding, and the best choice to eliminate your debt. A person who files a bankruptcy case is called a debtor, who seeks financial relief under chapter 7 of the bankruptcy code.


When a credit card account goes delinquent for more than 180 days, banks will charge off what is owed as “bad debt”, and sell the account to a debt collector who will start harassing you for past due balances. The consumer has no option but to declare himself bankrupt. It is here when chapter 7 bankruptcy comes to rescue, and can help you eliminate all your credit card debts.


When you are facing overwhelming debt, foreclosure or persecution from debt collector then you should just go for the right option and that is bankruptcy. When you file for chapter 7 bankruptcy, the automatic stay immediately comes into effect.  

What is Automatic Stay?

The automatic stay will forbid the creditors from taking any action against you or contacting you for collection activities such as wage garnishments, foreclosure, and vehicle repossession. This will provide relief to you and also an opportunity to recover during bankruptcy. The automatic stay cannot prevent all the things.

So let’s go through the list of what automatic stay can prevent and what it cannot prevent.

Automatic Stay can do the following for you:

•    Stopping the discontinuation of utilities
If you have not paid your utility bills since few months and the company is threatening you that it will disconnect your water, phone, gas or electric service, then the automatic stay will stop the utility company from disconnecting your services at least for 20 days

•    Stopping foreclosure proceedings
When the bank of the financial institution that is holding your home mortgage starts the procedure of foreclosure proceedings, the automatic stay will stop the proceedings for a short period of time. Even if it’s temporarily stopped, the creditor will start the proceedings as soon as the automatic stay is lifted. If you are facing foreclosure and you want to save your house from it, then it is better to file chapter 13 bankruptcy instead of chapter 7 bankruptcy.

•    Stops eviction
If you are being evicted from your house by the landlord then the automatic stay might help you in stopping the eviction. But with the changes in the laws regarding automatic stay, if your landlord has a judgment of possession against you before you file, then the automatic stay won’t stop your landlord from evicting you. Even if the landlord has not started any eviction proceedings against you, the automatic stay won’t buy you more than few weeks or few days in your current home. If the landlord claims that you are misusing or endangering the property or selling or using controlled substances on his property then the automatic stay won’t do any good to you as the court will be on the side of landlords.  Even if you are not causing any harm to property the landlord can ask the court to lift the stay and allow the eviction and the court will give permission to do so.

•    Stopping the collection of overpayments of public benefits
If you received any public benefits and were overpaid before you filed for bankruptcy, then the automatic stay will stop the agency from collecting any overpayments until the automatic stay is lifted. However, if you become ineligible for benefits during your bankruptcy, then the automatic stay cannot prevent the agencies from collecting overpayments from you.

•    Preventing multiple wage garnishments
When you have filed for bankruptcy, the automatic stay will stop all the wage garnishments in their tracks. If you have more than one wage garnishments, then consider filing for bankruptcy so that you can take your entire salary home.

Automatic stay cannot help you with the following:

•    Certain tax proceedings
The automatic stay will not help you in any way if the IRS wants to audit you or issue a tax deficiency notice against you. It cannot prevent IRS from demanding tax return or from issuing a tax assessment. What automatic stay can do is, stopping IRS from issuing a tax lien against your income or property.

•    Support actions
The automatic stay is not able to stop proceedings against you that tries to establish paternity or to establish, modify or collect child support. Even alimony cannot be stopped by filing for bankruptcy.

•    Criminal proceedings
If you are involved in any criminal proceedings that can be broken into criminal and debt components, the automatic stay will help you with by stopping the proceeding of the debt portion and cannot help you with the criminal component. For example, if you are convicted of small theft and sentenced to community service and ordered to make repayments, the automatic stay will stop only the repayments and you will still be required to do community service.

•    Loans from your pension
If you took any loan against your pension, the automatic stay won’t prevent your money from being withdrawn from your income in order to repay the loan to your pension.


Chapter 7  bankruptcy can offer you many benefits like discharging your debt, and giving you a fresh financial start. In fact, chapter 7 is the most common form of bankruptcy in the United States.

Below are  7 Benefits in Chapter 7 Bankruptcy:

1. As soon as you file for chapter 7 bankruptcy, the power of  the "automatic stay" goes into effect. Creditors must immediately stop all collection efforts.
2. Your case is faster is often over (discharged) in about 3 months.
3. There is no minimum amount of debt that you must have, to file chapter 7 bankruptcy.
4. The attorney’s legal fees for filing chapter 7 bankruptcy are much lower.
5. You can usually keep all of  your property. You may choose to continue with your vehicle or home payments.
6. You receive a fresh start. After the bankruptcy is discharged, the only debts you owe will be for secured assets on which you choose to sign a “reaffirmation agreement”, and any debts excluded from a chapter 7 discharge.
7. With debts being forgiven, you are financially and emotionally free. This will change your life from worry and stress, giving you a fresh financial start.

Chapter 7 Bankruptcy can also eliminate:

  • collection agency accounts

  • utility bills (past due amounts only)

  • business debts

  • medical bills

  • credit card charges

  • some taxes

  • payday loans

  • some types of liens

  • repossession and foreclosure debts

  • personal loans

  • overdrawn bank accounts

Chapter 7 Bankruptcy can also stop:


  • call harassment from collection agency

  • wage garnishment

  • lawsuits

  • vehicle repossession

  • foreclosures

  • judgments

  • license suspensions

  • eviction (if certain requirements are met)

  • overdrawn bank accounts


If you have debts piled up in your life and you are in such a situation where you cannot pay your debts and that would be the worst situation you can have in your life. When you are facing such a difficult challenge consider filing chapter 7 bankruptcy. It is the best option as it will help you in giving the fresh start to your financial future. The reason you should file for bankruptcy is to benefit from bankruptcy discharge.

What is bankruptcy discharge?

A bankruptcy discharge will free you from liability of paying for certain types of debts. The bankruptcy discharge is a legal document declaring that your debts are permanently and legally erased that you mentioned in your bankruptcy petition and you are not liable to pay any debts. When your debts are discharged creditor can no longer take any action like collecting discharged debts or taking any legal action or communicating with you by any means like phone calls, letters or e-mails.

Bankruptcy discharge which will be granted to you by the court somewhere around 3 months after you file for chapter 7 bankruptcy.
If you are filing for Chapter 7 Bankruptcy, you should know that not all the debts are dischargeable at the completion of bankruptcy procedure.

Court will not discharge your debts under following circumstances:

•    If you didn’t provide requested tax documents
•    If you did not complete the course of personal financial management
•    If you transfer or hide your property to cheat your creditors
•    If you destroy or hide books or records
•    If you commit perjury or other fraudulent acts which are connected to your bankruptcy case
•    If you violate the court orders
•    If you cannot explain for the lost assets