• Ben Zaeri

A Basic Guide to Chapter 7 Bankruptcy Filing

The process of a Chapter 7 Bankruptcy

Before filing Chapter 7 Bankruptcy, debtors must qualify by meeting certain guidelines.  Debtors must attend credit counseling with a course provider that is approved by the United States Trustee. Debtors must provide proof of income, debts, expenses, and assets.


Automatic Stay

Once a debtor files Chapter 7 Bankruptcy, the court will issue an automatic stay. Automatic stay is an order that prevents creditors from trying to collect on debts during the bankruptcy process. This also means any pending lawsuits must cease. An automatic stay prevents wage garnishment, filing of liens, and temporarily prevents repossession of property, such as a house or car. If the court dismisses your case, the automatic stay will be terminated and all collection activities and court proceedings will continue.


The Trustee in a Chapter 7 Bankruptcy

The bankruptcy court appoints a trustee for each Chapter 7 Bankruptcy case. The trustee oversees the case and ensures appropriate documents are filed.  They also calculate the value of nonexempt property to determine whether it can be sold for an amount to pay creditors. If property would not provide adequate compensation in a timely manner, the trustee could allow the debtor to keep the nonexempt property.


Chapter 7 Bankruptcy Meeting of the Creditors

The meeting of the creditors is a meeting at a courthouse, much like a hearing. The debtor must attend this meeting.  If the debtor does not attend this meeting, the trustee may dismiss the case. At the meeting, the trustee will ask a series of questions, review documents provided in the Chapter 7 Bankruptcy case, and make decisions about nonexempt property.


The Discharge of Debt under Chapter 7 Bankruptcy

A few months following the meeting of the creditors, the bankruptcy court will hold a discharge hearing and discharge debtor's unsecured debt. The court treats some secured debts differently, such as a car loan or a mortgage. The debtor has the opportunity to decide whether to return the property to the creditor or keep the property and agree to terms of a new contract by signing a Reaffirmation Agreement.


Qualification and Help

Prior to October 17, 2005, it was largely left to judicial discretion to determine whether a debtor qualified to file a Chapter 7 Bankruptcy. As a result, most filers chose to have debt discharged, even when capable of repaying debt in a Chapter 13 repayment plan. Current bankruptcy law requires a debtor must qualify by meeting certain criteria. An experienced Chapter 7 Bankruptcy attorney can evaluate your case and determine your eligibility.  Filing bankruptcy is a significant financial decision that is based on significant financial difficulties.  You should not face this decision alone. An experienced attorney can empower you with knowledge and confidence to make an informed decision.


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