Typical Chapter 7 scenarios:
*Scenario No.1
Debtor with one minor-dependent. Debtor is employed, earning approximately $45k (gross) per year. Debtor also receives $500 per month in child support. Debtor has credit cards, personal loans and old rent debt from her prior apartment.  Debtor rents its primary residence. Debtor has the following assets:

  • Payed off Vehicle worth approximately $6,500.

  • IRA Account with a balance of approximately $35k.

  • Some basic jewelry worth approximately $2,500.

  • Checking account with approximately $200

  • Basic household furniture, clothing, a cell phone, TVs other household items, toys, bicycles and

  • Debtor was recently involved in personal injury law suit and is expecting approximately $12k in settlement.

  • Employer-provided life insurance with no cash value.


 *Scenario No.2

 
Joint Debtors, husband and wife with three minor-dependents. Debtors are employed, earning approximately $95k (gross) per year. Debtors have two cars and they are currently making payments on both auto loans. Debtors has credit cards, personal loans. Debtors have two mortgages secured by  house. The house has little to no equity. Additionally, Debtors has the following assets:

  • 401k Retirement account with a balance of approximately $70k.

  • Some basic jewelry worth approximately $1,000.

  • Debtor has stock worth approximately $500

  • Basic household furniture, clothing, a cell phone, TVs other household items, toys, bicycles and

  • Checking and savings account with $1,500 in both account

Means Test Numbers by state as of April 1, 2020.

State1 Earner2 People3 People4 People
Pennsylvania$54,605$67,540$83,868$103,316
New Jersey$69,705$83,739$106,650$131,331
New York$48,772$62,050$69,162$87,505
North Carolina$87,137$72,642$88,240$107,550


Please contact us
at (215) 515-7113 or (732) 624-6283
for your FREE and NO OBLIGATIONS
Initial Consultation.

Chapter 7 Bankruptcy

However, to archive the best result, any Chapter 7 case must be carefully planned and executed.

Chapter 7 Debtors may obtain discharge only once every 8 Years. However, debtors may still file Chapter 13 or other types of bankruptcy cases to avoid collections, garnishment and other creditors’ actions.

Generous exemptions are available to protect some assets like cars, tools, books, jewelry, firearms, clothing, most retirement accounts (401k and IRA accounts), personal items, collectables and other items via available Federal or State Exemptions.

The vast majority of Chapter 7 cases are "no assets" and clients, where people may have no assets outside of the available exemptions to liquidate. People save their assets, while discharging most of their debts.

Clients must qualify for Chapter 7 Bankruptcy, which is known as Means Test. Clients must be below a certain income threshold. The Means Test is location specific and takes into account the applicable number of household members. As of April 1, 2020, the following numbers apply:

Please contact us
at (215) 515-7113 or (732) 624-6283
for your FREE and NO OBLIGATIONS
Initial Consultation.

Chapter 7 Bankruptcy for Individuals

**Add $9,000 for each individual in excess of 4.

Please contact us
at (215) 515-7113 or (732) 624-6283
for your FREE and NO OBLIGATIONS
Initial Consultation.

Litvak Legal Group, PLLC.

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Chapter 7 Bankruptcy Case

Chapter 7 WILL NOT discharge:

  • Most Tax Obligations, unless qualify for very strict rules. 
  • Child and Spousal Support Obligations
  • Student Loans can be discharged only under the extreme hardship circumstances.


Litvak Legal Group, Bankruptcy Lawyer and Tax

 The above numbers are periodically adjusted. Historically, the numbers were raised every so often and provided a much-needed adjustments in light of periodical ware increases and inflation rate.

Debtors must also complete pre- and post- filing approved debtor education programs. Some debtors may avoid the courses’ requirements under if Incapacitated, disability or active military duty in a combat zone or other “Exigent circumstances” exception. We can provide a list of approved debtor educational providers and recommend several we have worked with throughout the years.

Automatic Stay Provision of the Bankruptcy Code will stop Collections, Creditors' Calls, most Law Suits and even Tax Authorities’ collection actions. 

Individuals and Married Couples can discharge most of their debt. Join cases are now available to hetero-sexual and same-sex couples alike.

Additional Debt Relief strategies are available to further assist clients with non-dischargeable debt.

Chapter 7 Bankruptcy stops collections

Available to Individuals, Married Couples, Corporations and Partnerships.

Known as a Liquidation Proceeding.


In theory all of the debtors’ assets are sold and the proceeds are distributed among the creditors.


In practice, most debtors if not all debtors keep their assets, while discharging their debts.