What Is Chapter 7 Bankruptcy?

In recent years, the prolonged economic downturn has left many members of the Korean-American community overwhelmed by mounting debts. For individuals suffering under constant collection calls and rapidly growing credit card balances, Chapter 7 bankruptcy can offer meaningful relief and a fresh start.

There are several types of bankruptcy filings, including Chapter 7, Chapter 11, and Chapter 13. Among these, Chapter 7 is the most widely used option for individuals with low income and unmanageable levels of debt. Its greatest advantage is its accessibility—most people with annual incomes under $100,000 will generally qualify for Chapter 7 bankruptcy. For those with higher incomes, Chapter 13 bankruptcy may still be available.

In essence, Chapter 7 allows for the complete discharge of eligible debts—even in cases where the total debt exceeds $500,000. Once the bankruptcy petition is filed through a qualified attorney, the entire process typically takes around three months, after which the individual’s debts are legally wiped out, allowing for a true financial reset.

Many prospective clients have expressed concerns such as, “Isn’t filing for bankruptcy the same as walking away from my obligations? I feel uneasy about the ethics of that…”
It is important to understand that credit card companies in the U.S. routinely charge interest rates of 20% to 50% per year, profiting heavily off of working-class individuals. These companies frequently encourage consumers to open new lines of credit or take out additional loans—despite their financial limitations—thus creating a cycle of debt dependency. The resulting compounding interest leads to financial hardship, and in some cases, borrowers are forced to juggle one credit card to pay off another.

The root issue lies not simply with the borrower but with a system designed to exploit them. From an economic standpoint, the U.S.—as a capitalist society—recognizes that a financially overwhelmed individual is unlikely to contribute to the economy. In fact, the government prefers that such individuals discharge their debts, rebuild their credit, and resume economic activity (e.g., purchasing goods, vehicles, and homes). For this reason, the bankruptcy process in the U.S. is relatively accessible.

Our firm has successfully handled numerous Chapter 7 and Chapter 13 bankruptcy filings. If your debts exceed $10,000 and you are unable—or unwilling—to repay them, we encourage you to consult with us and take steps toward financial freedom.

This column is intended solely to provide general information on bankruptcy law and should not be considered formal legal advice. If you are considering filing for bankruptcy, we strongly recommend that you consult a qualified bankruptcy attorney to fully understand and protect your legal rights.