Chapter 7 (Straight Bankruptcy)
In a bankruptcy case under chapter 7, you file a petition asking the court to discharge your debts. The basic idea in a chapter 7 bankruptcy is to wipe out (discharge) your debts in exchange for your giving up property, except for “exempt” property which the law allows you to keep.
In most cases, all of your property will be exempt. But property that is not exempt is sold, with the money distributed to creditors.
Some common non-exempt assets are:
Money in Bank Accounts (other than (I.R.A.s),
More than 1 Car,
Real estate that is not my primary residence,
Financial Instruments (like insurance, stocks, bonds, etc.),
Interests in a Company, Business, Copyright,
Business Inventory or Collections.
Most debtor’s homes, in which the debtors live, in Kansas are exempt. There are exceptions and limitations regarding the Kansas homestead exemption in bankruptcy cases, particularly if you have moved to Kansas in the last two years.
If you want to keep property like a home or a car and are behind on the mortgage or car loan payments, a chapter 7 case probably will not be the right choice for you. That is because chapter 7 bankruptcy does not eliminate the right of mortgage holders or car loan creditors to take your property to cover your debt. If your income is above the median family income in your state, you may consider filing a chapter 13 case.