By the time someone considers filing for bankruptcy, they’ve usually exhausted every other option. It’s not an easy decision and probably shouldn’t be. However, Chapter 7 bankruptcy offers an opportunity to get a fresh start.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy is a liquidation bankruptcy. Most, if not all, debts will be discharged. The bankruptcy trustee has the authority to sell some property and use the proceeds to pay off creditors, but most people keep their property. Secured debts, such as a car loan, should be discussed with a Chapter 7 bankruptcy lawyer to determine the best way to handle them. The entire process takes four to six months. Everyone who files for Chapter 7 must go to credit counseling with an approved agency.
Eligibility
There are several criteria that must be met to be eligible to file for Chapter 7.
* Current monthly income must be equal to or less than the median income for a family of similar size. If the income is too high, the rules require that a complicated “means test” be passed in order to qualify for Chapter 7.
* There must not have been a bankruptcy discharge in the past six to eight years.
* The court must not believe that the creditors could have been paid and are being cheated.
* If the court feels that the debtor could complete a Chapter 13 repayment plan, they will not be eligible for a Chapter 7 liquidation bankruptcy.
The Automatic Stay – Immediate Relief
As soon as the bankruptcy is filed, the automatic stay puts a stop to phone calls, letters, and other collection attempts from creditors. During the bankruptcy process, creditors are not allowed to garnish wages, take money from your bank account, or cut off the utilities.
The Creditors Meeting
All of the creditors will receive a notice to attend a creditors meeting. The bankruptcy trustee conducts the meeting and may ask questions about information given on the papers that were filed. This is normally the only time it’s necessary to go to court.
The Bankruptcy Discharge
Most debts will be discharged at the conclusion of the bankruptcy process. There are a few debts that will not be wiped out, including child support, most taxes, and student loans.
A Chapter 7 bankruptcy lawyer would assist throughout the bankruptcy process, making it all go as smoothly as possible.
