Chapter 7 Bankruptcy
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Chapter 7 Bankruptcy Explained
Chapter 7 Bankruptcy is the simplest form of bankruptcy. In theory, Chapter 7 Bankruptcy allows the Trustee assigned to your case to liquidate your assets to satisfy your obligations to your creditors, but in practice you are usually able to exempt the majority of your assets. In order to qualify to file Chapter 7 Bankruptcy you must meet one of two criteria, either your household income must fall below the median income for your state based on household size or you must pass the means test. Additionally, you must not have regular disposable income that could be used for a Chapter 13 plan.
Do I Qualify?
If you qualify for Chapter 7, you first must take a bankruptcy course prior to the filing of the bankruptcy. Only in extremely rare cases will the court allow you to take the course after filing. Prior to filing, you will complete the bankruptcy intake questionnaire that provides the information needed to fill out your bankruptcy forms and schedules. The information from your credit report will be integrated to ensure that all of your debts are discharged. If you do not disclose a debt, it will not be discharged. It is also very important that all of your assets are disclosed so that they can be exempted (protected) from liquidation. If you do not list an asset and exempt it, it can be seized by the Trustee and used to pay your creditors. Concealing assets is a federal offense.
Also, when deciding whether to file a Chapter 7 Bankruptcy, it is important to consider what secured assets you have. If you have a mortgage or car loan, and are behind on those payments, Chapter 7 Bankruptcy will not protect you against losing your car or home. If you have a house or car and intend to keep it, you will consider entering into a Reaffirmation Agreement. This means that you are entering into an agreement to keep the debt, even though you have the right to have it discharged, so that you can keep the asset. If you are behind on payments on your mortgage, you may wish to file a Chapter 13 that allows you to repay the delinquent amount over time.
Another issue is to decide on any unexpired leases whether you wish to keep them or terminate them. Leases can be a residential lease or a vehicle lease. The bankruptcy can allow you to walk away from unaffordable leases.
The Process
Initial Filing
After your bankruptcy forms and schedules are completed, you will review them to ensure that all of your assets and all of your debts are included, and that the information is accurate. You will then sign the forms, and the documents will be filed with the Bankruptcy Court. After the petition is filed, your case will be assigned to one of the Chapter 7 Trustees. The current Chapter 7 Trustees are Shelley Krohn, Brian Shapiro, and Lenard Schwartzer.
Providing Documents
Within two weeks of filing your case, you will need to provide documents to the Trustee assigned to your case including the Chapter 7 Bankruptcy Questionnaire, your pay stubs for the last six months, your bank statements for the last six months, and your tax returns for the last two years. Additional documents may be required depending on your specific facts.
30-60 Days
Approximately thirty (30) days after your case is filed, the Trustee will hold what is known as the 341 meeting or “meeting of creditors”. This meeting is required. At the 341 meeting, the trustee will place you under oath and question you regarding your bankruptcy. The Trustee may or may not need additional documents based on your answers. You also could be required to file an amendment if your information is incorrect or has changed. You will also need to take your second course following the 341 meeting. Both the “Credit Counseling” and the “Debtor’s Education” courses can be taken online, in person, or over the phone.
60 Days & Beyond
Approximately sixty (60) days after the 341 meeting, as long as all of the requirements are met, the Debtor will receive their discharge. This means that the debtor is no longer responsible for the debts that have been discharged. Any further attempts by creditors to collect discharged debts are in violation of the bankruptcy discharge and subject the responsible party to sanctions and paying the debtor’s attorneys’ fees and costs to stop the collection attempts.
Time To Discuss Your Options?
At Lizada Law Firm, Ltd., you will have a free Bankruptcy with attorney Angela J. Lizada, Esq. and Attorney Lizada will be present with you at your 341 meeting. We will discuss the bankruptcy process based on your specific facts and explain the requirements, procedures, and what to expect at your 341 meeting with the Trustee assigned to your case. At Lizada Law Firm, we focus on you as an individual and your reasons for choosing bankruptcy to ensure that filing banruptcy is the right option for you and your financial situation.