Chapter 7 Lawyer: move fast before the deadline or the situation gets worse.

Chapter 7 explained without legalese

Chapter 7 is the fastest, cleanest debt elimination tool in U.S. law. You file a petition, attend one meeting with the trustee, and 60–90 days later most of your unsecured debt is legally erased. Total case timeline: about 3–5 months. No payment plan. No repayment. You're done.

Who qualifies for Chapter 7

Two paths to qualify:

1. Below state median income — automatic qualification. Income is measured over the 6 months prior to filing, annualized.
2. Above median but pass the means test — the means test deducts IRS-allowed expenses (housing, transportation, food, health care, secured debt payments) from income; if disposable income is below the threshold, you qualify.

State medians range from ~$58,000 (one person) to ~$140,000+ (family of four) depending on state and household size. They're updated every six months.

What you keep

Almost everything, in most cases. Federal and state exemptions protect:

• Your home (up to your state's homestead exemption — often $15,000–$175,000+ of equity)
• Your car (up to vehicle exemption — typically $3,000–$10,000)
• Retirement accounts — nearly always fully protected (401k, IRA, pension)
• Household goods, clothing, personal items — usually fully protected
• Tools of your trade
• Future earnings (paychecks after filing are yours)
• Social Security, unemployment, disability benefits

What you might lose

• Equity in a second home or investment property
• Boats, recreational vehicles, jet skis, expensive jewelry above exemption limits
• Cash and bank balances above wildcard exemption
• Tax refunds for the year of filing (sometimes)
• Inheritance received within 180 days of filing

In practice, the National Bureau of Economic Research has found over 90% of Ch. 7 cases are "no asset" — the trustee finds nothing to sell.

What gets wiped out

Credit card debt, medical bills, personal loans, payday loans, deficiency balances after car repossession, most old utility bills, judgments from civil lawsuits, business debts you personally guaranteed, old gym memberships, old leases.

What doesn't get wiped out

• Student loans (with rare hardship exception; rules are loosening but still narrow)
• Recent income tax (older than 3 years AND filed on time may discharge)
• Child support and alimony
• Criminal fines, restitution, traffic tickets
• Debts incurred by fraud or false pretenses
• Luxury purchases within 90 days of filing
• Cash advances over $1,000 within 70 days of filing
• DUI judgments

Step-by-step timeline

1. Day 0: Hire lawyer, gather documents (4–6 weeks of prep typical)
2. Pre-filing: Complete first credit-counseling course (online, ~$20, 60–90 minutes)
3. Filing day: Petition filed; automatic stay halts all collection immediately
4. 21–40 days later: Meeting of creditors (341 meeting) — short, usually 5–10 minutes, with the trustee, by phone or video in most courts
5. 60 days later: Creditor objection deadline; trustee finalizes any asset issues
6. Complete second credit course before discharge
7. ~90 days after filing: Discharge order — debts legally erased

What it costs

• Lawyer fees: $1,200–$2,500 typical (must be paid before filing in most jurisdictions)
• Court filing fee: $338 (waivable or payable in installments)
• Credit counseling + debtor education courses: $20–$60 total
• Total typical out-of-pocket: $1,500–$2,800

What "doing it yourself" actually risks

Pro se Ch. 7 filings have higher dismissal rates and a meaningful percentage end up worse off — losing assets that would've been exempt with proper planning, missing exemption deadlines, mis-classifying secured debt, mis-completing the means test, or making preferential payments to family that get clawed back. The lawyer fee is small compared to a $10,000 exemption mistake.

Common myths

• "I'll never get credit again." Most Ch. 7 filers have credit card offers within 6–12 months and qualify for FHA mortgages 2 years after discharge.
• "My employer will fire me." Federal law prohibits employers from firing or refusing to hire because of bankruptcy filing.
• "I have to give up everything." No — exemptions protect most filers' assets entirely.
• "It's only for people who are reckless." Medical debt is the #1 cause of bankruptcy in America. Job loss, divorce, and small business failure account for most of the rest.

What to do this week if you're considering it

1. Stop using credit cards (recent charges are non-dischargeable)
2. Stop paying back family loans or transferring assets to relatives (these become "preferences" and "fraudulent transfers")
3. Gather 6 months of pay stubs, 2 years of tax returns, and current bills
4. Free consult with a Ch. 7 lawyer — most offer them
5. If you have a foreclosure or repossession deadline approaching, treat the consultation as urgent — the automatic stay halts both upon filing