A case brought under Chapter 7 of the Bankruptcy Code has the goal of liquidating all assets, paying all liabilities as far as the money will go, and then obtaining a discharge for the debtor for the remaining liabilities so he or she can make a fresh financial start.
Keep in mind that some debts cannot be discharged, such as judgments for money damages for fraud, payroll withholding taxes, intentional damage, domestic obligations, and other items.
Also, because of past credit card abuses with debtors maxing out their credit cards and then filing for bankruptcy, there is now increased scrutiny of purchases prior to bankruptcy. Suspect purchases will be denied discharge.
Debtors requesting Chapter 7 relief must complete government approved credit counseling before filing or within a short time afterward if it is an emergency. Debtors may be forced to enter Chapter 13 rather than Chapter 7 bankruptcy if a means test determines they have the ability to repay some debts over time.
Chapter 7 rarely stops a foreclosure; it merely slows things down. In the typical Chapter 7 case, the debtor will have little or no equity in the home. Rather than liquidate the property and turn the money over to the lender, the court will simply abandon the house and allow foreclosure to proceed. Do not be discouraged if a borrower enters Chapter 7.
Be patient and keep track of the court proceedings.