The Basics of Chapter 7
When most people consider filing bankruptcy for debt relief, they are thinking about filing under Chapter 7 of the Bankruptcy Code. A Chapter 7 bankruptcy is a straight wipe out of all of your debt, with a few exclusions thrown in.
Chapter 7 bankruptcies may be filed by an individual, a husband and wife together or separately, as well as corporations looking to stop operations completely. A Chapter 7 bankruptcy is the most commonly filed form of bankruptcy, as well as the quickest way to get a “fresh start.” A discharge, or “wipe out” of the debt can be achieved in as little as three to four months from the date of the filing of the petition.
While Chapter 7 bankruptcy is the most commonly filed form of bankruptcy, the vast majority of its filings are attributed to individuals or married couples, referred to in the bankruptcy court as debtors. The court looks at the time of the filing of the Chapter 7 bankruptcy petition if the debt is considered to be mostly consumer debt or business debt. Consumer debt is most common. Examples of consumer debt are credit cards, medical bills, personal loans, vehicle purchases, mortgages, and taxes. Business debts are all debts arising out of the ownership or operation of a business. If most of the debt does fall into the consumer debt category the debtors will be required to complete a mandatory credit counseling class prior to filing the petition. These classes are completed through federally approved agencies. Your Detroit, Michigan A Better Way Bankruptcy attorney can tell you which ones will work best for you, as some provide multi-lingual or internet services.
The filing of a Chapter 7 bankruptcy petition with the bankruptcy court starts the proceedings. The Chapter 7 bankruptcy petition and schedules go into detail what the financial situation was prior to the filing of the petition. Many documents are needed to generate the information on these Chapter 7 bankruptcy forms, such as pay stubs and other earning information, income tax returns, bank statements, car titles, real estate documentation and the like. A complete list of creditors must also be filed with the court. A creditor in bankruptcy is defined as everyone you owe money to. Anyone considering filing a Chapter 7 bankruptcy petition is cautioned to tell their bankruptcy lawyer about any and all assets and creditors, even if there is a creditor they want “left out” of the petition. The bankruptcy court sends out notices of Chapter 7 bankruptcy filing to all creditors once the Chapter 7 bankruptcy petition has been filed.
Contrary to popular belief, you are able to keep most if not all of your personal possessions after filing Chapter 7 bankruptcy. The Bankruptcy Code provides for protection of your assets, with certain restrictions. Gone are the days where you “lose your shirt” when you file. Frankly, the court would rather have clothed debtors attend hearings. Your Detroit, Michigan A Better Way Bankruptcy attorney is only as good as the information provided, so make sure to tell him or her about everything you own, even if you do not think it has a value. All assets have a value, and everything you have is an asset.
Approximately one month after the filing of your Chapter 7 bankruptcy petition, you will be required to attend what is called a Section 341 Meeting of Creditors. At this hearing, the trustee assigned to your case will review the Chapter 7 bankruptcy petition and schedules that have been filed on your behalf with the court, as well as ask for more detailed explanations regarding your case. The trustees are a division of the Department of Justice and the primary purpose at these hearings is to determine that you had sufficient knowledge about everything filed in your Chapter 7 bankruptcy petition, that you listed everything accurately including all creditors and assets, and if there have been any changes since the filing of the case, such as a lost job or house fire, that those be addressed. Furthermore, the trustees review the Chapter 7 bankruptcy cases to make certain all assets have been listed and protected. If the assets are non-exempt or had not been disclosed to the court, then the trustee will try to sell off that asset and used the money to benefit your creditors. Often times there are no assets to be recovered by the trustee. Questions may be asked by any creditor who wishes to appear, as well.
After this hearing, creditors have an additional 60 days to protest to the Chapter 7 bankruptcy filing. It is during this “wait and see” time that debtors must complete debtor education, if they had not done so prior to their hearing. Debtor education is a class that will last roughly two hours and is offered often times by the same federally approved agencies that administered the credit counseling for bankruptcy purposes. Failure to complete the debtor education will result in a dismissal of the Chapter 7 bankruptcy case.
Once the court and creditors are satisfied that the Chapter 7 bankruptcy schedules and petition are true and accurate, and that there are no further assets to liquidate, the trustee will file a notice with the bankruptcy court. Once this notice has been filed, a discharge letter will be mailed to the debtor signaling the end of the Chapter 7 bankruptcy case. This does not necessarily mean the end of the Chapter 7 bankruptcy case, however. If you become entitled to insurance proceeds, inheritance, or lottery winnings in the six months following the filing of the Chapter 7 bankruptcy petition, contact your attorney. Paperwork MUST be amended to address these issues.
Any concerns with the discharge of particular debts may be addressed with the attorney at any time. Furthermore, it is always a good idea to make several copies of your Chapter 7 bankruptcy discharge letter and put them in a file. You never know when you will need this information again.
The bankruptcy attorneys at A Better Way Bankruptcy follow your case from client consultation through the discharge process. We have over 25 years of experience dealing solely with bankruptcy law. A Better Way Bankruptcy offers affordable bankruptcy attorney fees and payment options because we care about each and every one of our clients. Call us for a free consultation today to determine if Chapter 7 bankruptcy is right for you.