chapter 7 bankruptcy
Chapter 7 Bankruptcy is a United States legal process that wipes out most unsecured debts by selling off a person's non essential property to pay creditors.
In plain English
Adaeze had been in Houston for six years, sending money home to her mother in Onitsha every month without fail, when the hospital bills from her son's surgery and three maxed out credit cards finally caught up with her.
She owed more than she earned in a year, and the calls from collectors had become a second job she never applied for.
A lawyer told her about Chapter 7, a part of United States bankruptcy law that lets someone hand over whatever non essential property they own so a court appointed trustee can sell it and pay creditors, and in exchange, most of what remains of the unsecured debt simply disappears.
It is not a loophole and it is not free money, it shows up on her credit report for ten years and she had to prove through a means test that her income was low enough to qualify rather than being pushed towards a repayment plan instead.
Nigeria does not have this exact process, our closest cousin is the Bankruptcy and Insolvency Act, and it works differently and is used far less often, mostly for businesses winding down rather than individuals starting fresh.
Adaeze kept sending money home during the case, because feeding her mother was never in question, but she stopped answering blocked numbers, because the court had finally answered them for her.
Adaeze owed ₦18,000,000 in medical bills and credit card debt in the United States. After filing Chapter 7, the court sold her car and some jewellery for ₦3,200,000 to pay creditors, and the remaining ₦14,800,000 in unsecured debt was legally erased.
Questions people ask
Can a Nigerian living in Nigeria file for Chapter 7 Bankruptcy?
No, Chapter 7 is specific to United States law and courts. Someone living in Nigeria with debt there would look at the Bankruptcy and Insolvency Act or negotiate directly with lenders instead.
Does Chapter 7 erase all types of debt?
No, it mainly clears unsecured debt like credit cards and medical bills. Things like most student loans, recent taxes and child support usually survive the process and still have to be paid.
How badly does Chapter 7 affect someone's ability to borrow afterwards?
It stays on a United States credit report for ten years and makes borrowing harder and pricier for a while, but many people rebuild steadily within two to four years by paying bills on time and using credit carefully.
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