What is Chapter 7 Bankruptcy?

Chapter 7 bankruptcy, often referred to as a “liquidation bankruptcy,” involves gathering and selling non-exempt assets. The proceeds from these assets are distributed to unsecured creditors. Unlike Chapter 13 bankruptcy, which relies on your income to repay creditors, Chapter 7 uses the value of your non-exempt property to settle debts.

Do You Qualify For Bankruptcy? 

Take the first steps and answer a few questions to make sure you qualify for bankruptcy.

Ready to Schedule a Consultation?

If you qualify for bankruptcy and would like to schedule a consultation, get started here.

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Who Qualifies for Chapter 7 Bankruptcy?

Not everyone is eligible to file for Chapter 7 bankruptcy. Your income and expenses will be evaluated to determine if your earnings fall below the median income level for your state (Kansas or Missouri, for example). Even if your income exceeds the median, you may still qualify after taking into account allowable deductions.

For more details on eligibility, check out our Bankruptcy FAQ. The experienced attorneys at Bloom Legal Advisors will review your financial situation, help you determine which type of bankruptcy is best for you, and advise whether your property is exempt.

Located in the Kansas City area, our bankruptcy attorneys are here to guide you through the decision-making process. Contact us today to schedule a free bankruptcy consultation by calling or emailing our office. Let us help you take the first step toward financial relief!

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What Debts are NOT Discharged in Chapter 7 Bankruptcy?

Although Chapter 7 provides relief from many debts, certain obligations are typically non-dischargeable, including:

  • Child support, alimony, and other domestic court orders
  • Student loans (except in rare cases)
  • Debts obtained through fraud, false representation, or intentional misrepresentation
  • Luxury purchases exceeding $800 made within 90 days of filing
  • Cash advances over $1,100 taken within 70 days of filing
  • Personal injury claims resulting from intoxicated driving
  • Criminal fines and restitution
  • Debts from willful or malicious injury to another person or their property
  • Certain tax debts and obligations to government entities
  • Traffic and parking tickets
  • Debts related to divorce or separation agreements, excluding child support or alimony
  • Debts incurred to pay off non-dischargeable debts

Contact us today to explore your legal options and start your journey toward financial freedom with trusted Kansas City bankruptcy lawyers by your side.

Chapter 7 Bankruptcy Frequently Asked Questions – FAQ

Chapter 7 bankruptcy is often called “liquidation bankruptcy.” It allows individuals to eliminate many unsecured debts such as credit cards, medical bills, and personal 

Qualification is based on the means test, which compares your income to the median income in your state. If your income is below the median, you typically qualify. If it is higher, you may still qualify after deductions and expenses are considered.

Chapter 7 can eliminate many unsecured debts, including:

  • Credit card debt
  • Medical bills
  • Personal loans
  • Collection accounts
  • Certain civil judgments

Some debts usually cannot be eliminated, including:

  • Child support and alimony
  • Most student loans
  • Recent luxury purchases or cash advances
  • Criminal fines or restitution
  • Certain tax debts

Many people keep most or all of their property. State and federal bankruptcy exemptions protect assets like your home, car, household items, and retirement accounts.

Most Chapter 7 cases take about 3–4 months from filing to discharge.

You are not required to have an attorney, but a bankruptcy lawyer helps ensure paperwork is filed correctly, protects your property, and guides you through the legal process.

Start by scheduling a consultation with a bankruptcy attorney to review your financial situation and determine your options.