Earning a fresh start is the congressional intent behind the Chapter 7 bankruptcy option.  It is available for individuals who have mostly unsecured debt and little in the way of assets.  In most Chapter 7 bankruptcy case, a person keeps all of his property free and clear from claims of creditors.  There are some exceptions to this general rule.  For example, if a debtor has too much equity or ownership in real estate or vehicles, the debtor may have to pay something to a Chapter 7 trustee to keep the items.  This is known as buying-out the trustee’s interest.  When a Chapter 7 bankruptcy case is filed, the Chapter 7 trustee takes over all of the non-exempt property of the estate.  The debtor can then buy back his interest or that property will be sold for the benefit of creditors.

Each state has different exemption amounts, thus, it does make a difference where a person files. If the debtor has little equity in real estate or vehicles and wishes to retain those items, he may have to reaffirm the debts on those items.  Reaffirming a debt requires the debtor to enter into an agreement which is filed with the court.  The judge may set a hearing to determine if the debtor can afford to retain the debt after the bankruptcy case has closed.  If the judge is not convinced, the reaffirmation agreement will not be approved.  In most cases, approval of reaffirmation agreements has not been difficult to obtain.

Lastly, a person can receive a discharge under Chapter 7 every eight years.  Hopefully, a single bankruptcy filing is all a person would ever need.