Chapter 7
All "chapters" of bankruptcy can stop garnishments, harassing phone calls, collections, foreclosures and lawsuits. This is usually referred to as the “automatic stay” (an order barring all creditors from taking any further collections or legal action against you). However, if you had a case dismissed within the past year, the “automatic stay” may not apply.
The Bankruptcy Reform Act (or Chapter 7) was enacted to allow persons who are hopelessly burdened by debt to start fresh and have the opportunity for a new beginning by wiping out unsecured debts. Chapter 7 is designed for persons who cannot afford to pay a significant portion their debt back.
When you file a Chapter 7 most of your unsecured credit cards, medical bills, utility bills, some overdraft charges and bad checks, as well as balances on foreclosures and repossessions are discharged or wiped out. Although occasionally taxes and student loans are forgiven, the situations where these debts can be discharged are somewhat rare.
You should consult a bankruptcy attorney for specific information relating to the discharge of taxes and student loans. It is important to note that the law is constantly changing and no attorney can guarantee that any single debt will be forgiven. Below is a list of debts that are not dischargeable in a Chapter 7 Bankruptcy.
Debts that are not discharged in a Chapter 7:
• Debts incurred through fraud, such as lying about your income on a credit application
• Child and spousal support
• Debts incurred as a property settlement in a divorce
• Most taxes
• Most student loans
• Debts you forgot to list on your bankruptcy papers
• Debts for personal injury and death caused by your driving a motor vehicle while intoxicated
• Debts you never intended to pay back (you took on the debt near in time to filing bankruptcy, you took a cash advance and never paid any money back, debt taken on after meeting with a bankruptcy attorney)
• Debts for personal injury and property damage incurred through willful or malicious harm
• Criminal fines and penalties.
There are other debts that may not be dischargeable. Consult your attorney to see whether a specific debt is dischargeable. No attorney should ever guarantee the discharge of a specific debt.
The Process to filing a Chapter 7:
1. Provide us with your financial information:
For your free initial consultation, we will need you to bring the following:
• A complete list of your creditors – everyone you owe money too, even those you intend to pay back.
• A complete list of your assets, including everything you own — even if it was given to you
• A recent pay stub from each of your places of employment
• W-2's or tax returns from the previous tax year
These documents will get us started.
2. Before filing:
At the initial consultation, we will give you a list of documents you will need to provide so we can prepare your bankruptcy petition and schedules. We will also provide you with an intake form to complete. When you have completed assembling your documents and filling out the intake form, we will make a second appointment to review your documents and intake form.
3. Attend credit-counseling:
Next, you will attend credit-counseling and obtain a credit-counseling certificate. In the meantime, we will prepare your court papers. We will have a final in-office appointment, where we will completely review your bankruptcy petition and schedules with you, and you will sign your petition and schedules.
4. Papers filed in court:
We then file your papers electronically with the Bankruptcy Court, in which you will receive immediate protection from harassing creditors. Right after filing your case, we will provide you with your bankruptcy case number. If you receive phone calls from bill collectors, you can give the creditor your case number and our phone number. They should deal with our office directly. If you have creditors who are garnishing your wages, foreclosing on your house or repossessing property, contact this office and we will notify that creditor immediately.
5. Financial Management Course:
After we have filed your case, you will need to attend The Financial Management Course approved by the U.S. Trustee's office. You will then give this certificate to your attorney at the Meeting of Creditors (see below).
6. Attend Meeting of Creditors:
Approximately 30 days after your case is filed, we will attend a hearing with you that is called a 341 Meeting of Creditors. At this meeting, a Trustee who is appointed to your case will interview you for approximately 5-10 minutes and ask some basic questions about your case. This meeting is mandatory, and you must appear with proper identification (current picture identification and social security card). You must also bring a copy of your most recent statements for all financial accounts and the pay stub(s) that you receive immediately after filing your case. The meeting is called the Meeting of Creditors — because this is also an opportunity for the creditors to come and ask you questions. However, in most cases, creditors do not appear.
7. Wait 60 days:
In each case, the Trustee and the Creditors are given time to object to various aspects of your petition and schedules. Although objections are rare, they do occur in some cases. All objections are due within 60 days after the Meeting of Creditors. Quality preparation of your petition, schedules, and statements can help to prevent most unnecessary objections.
8. Receive discharge:
If no party files an objection in your case, you should receive a discharge shortly after the 60-day waiting period expires.
9. Post-discharge asset administration:
In some filings, where non-exempt assets are turned over to the bankruptcy estate, your case may remain open until all of the assets are received and distributed.
Chapter 7 Basics
Pursuant to 11 USC §528, all bankruptcy attorneys have been designated “debt-relief agents” and are required to disclose that we help people file for bankruptcy relief under the United States Bankruptcy Code.
what is Chapter 7?
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