Chapter 7 bankruptcy is a liquidation proceeding. If you have some non-exempt assets, they’re sold by the Chapter 7 trustee and the proceeds are dispersed to your creditors according to the priorities established in the Bankruptcy Code. In nearly all consumer cases, all assets are exempt. There are, therefore, no assets to liquidate and no money to pay out to creditors. Chapter 7 is ordinarily the easiest and fastest form of bankruptcy. It’s available to individuals, married couples, corporations and partnerships.
Before you’ll be allowed to file Chapter 7 bankruptcy you’ll have to pass means test. The means test is a computation that compares your average income for the last six months, annualized, to the average income for households of the same size in your state. If your income is less than or equal to the state average income, you “pass” the means test and may file Chapter 7 bankruptcy.
You Commence by Filing a Chapter 7 Bankruptcy Petition
Your Chapter 7 bankruptcy is initiated by filing the official petition, schedules and statement of financial affairs. These forms ask you to list all of your assets and all of your debts, along with some recent financial history. This is the most important and most time intensive part of a bankruptcy filing.
It’s crucial that you list each of your creditors with accurate mailing addresses. You must list all of your debts. You must even list those debts that are’t dischargeable and those you plan to reaffirm.
You must similarly name all of your property, along with any debts secured by that property, and the sale value of the property. “Property” as defined by the Bankruptcy Code signifies “assets” or “possessions.” It’s not restricted to just real property.
You must sign the schedules under penalty of perjury. You then file the schedules with the bankruptcy clerk in the district in which you live.
After you file your Chapter 7 bankruptcy petition, all the following bankruptcy proceedings relate to your state of affairs as it existed on the date of filing.
The automatic stay goes in effect upon filing the petition. The automatic stay produces a legal barricade to collection actions by creditors. They can no longer contact you in an effort to collect a debt.
The court then names a trustee and mails notice to all your creditors telling them that you’ve filed bankruptcy. You’ll receive a copy of that notice simultaneously with the your creditors.
Initial Meeting of Creditors
You must appear at a meeting of creditors. This is commonly called the section 341 meeting. It gets its name from the section of the Bankruptcy Code that describes the meeting. At the meeting of creditors, the trustee will interview you about your assets and liabilities. Your answers are made under oath and carry the penalty of perjury. Creditors can also question you about those things, but they rarely do so.
After The Initial Meeting of Creditors
If you have any non-exempt assets, the trustee will take charge of them. The trustee will sell the non-exempt assets and apply the income to the expenses of administrating your case. He’ll also parcel out any leftover funds to creditors with allowed claims. Each claim is allotted a priority according to the Bankrtupcy Code. Those claims are paid off in order of the priority of the claims.
The trustee may check over your income and expense schedule to determine whether you have enough money remaining after your actual living expenses to pay something to creditors. Any money you make after the case is begun is yours. It’s out of the touch of creditors who have dischargeable debts on the date of filing.
Normally, the sole responsibility you have after the 341 meeting is to cooperate with the trustee by supplying whatever information he calls for.
Getting A Discharge
The trustee and your creditors have a 60 day time period following the 341 meeting during which they may dispute your right to a discharge generally or the dischargeability of a particular debt. Unless a request to refuse your discharge is filed, the order allowing the discharge of debts is issued by the court shortly after the 60 day period goes by. If one creditor files a dispute to your discharge it doesn’t prevent or hold the entering of a discharge of the rest of your debts.
As a precondition to your discharge, you must finish a financial training course from an approved provider. The class usually lasts for several hours. Many authorized providers have online classes available. Your failure to attend the class and file a certificate of completion of the course of study may result in your case being closed without the entering of a discharge order. The court may charge you another filing fee to reopen the case, file the certificate and enter the discharge.
You can normally anticipate your discharge within 4-6 months of filing your case. The discharge touches dischargeable debts that existed at the start of your case.
Some debts do come through a Chapter 7 bankruptcy discharge. They’re excluded from the discharge by law. Those specific debts are taxes, child support, student loans, and liens. If you reaffirm any debts they likewise come through the bankruptcy discharge.
Harvey L. Cox is a licensed attorney who runs a bankruptcy information site. Please visit The Bankruptcy Info Center to get more quality bankruptcy information and tips.
Last 10 posts in Consolidation Debt Program
- Bankruptcy - July 9th, 2009
- Michigan Bankruptcy Lawyer Helping Calm the Waters - July 8th, 2009
- Cleveland Bankruptcy Lawyer Make the Bankruptcy Process Easier - July 7th, 2009
- Flint Bankruptcy Lawyers Take a Look at the Emotional Side of Bankruptcy - July 6th, 2009
- Education Through Your Cincinnati Bankruptcy Attorney - July 6th, 2009
- Rebuilding Credit after Bankruptcy - June 6th, 2009
- The Guide On Learning About Chapter 13 Bankruptcy Information - June 5th, 2009
- New Bankruptcy Code - June 1st, 2009
- Debt Consolidation--Consolidate Student Loans? - May 31st, 2009
- A User Friendly Guide To Bankruptcy: The Problems It Poses - May 31st, 2009
There are no posts related to Filing Chapter 7 Bankruptcy: A Procedural Overview.
57 comments
6 pings
Shirlene Stole says:
September 18, 2010 at 5:00 pm (UTC -6)
do you have any update on this?
Computers says:
September 18, 2010 at 6:43 am (UTC -6)
Obama will most likely be the preliminary 1 expression prez we’ve possessed inside of a prolonged time.
Auckland Backpackers Hostel says:
September 18, 2010 at 4:44 am (UTC -6)
We are in tough times nowadays, economic is pretty bad. To gain traffic and readers, it’s really about putting quality contents and interesting articles.
diet carbohydrates says:
September 17, 2010 at 9:26 am (UTC -6)
Is this similiar to the truth about abs course that Mike Geary offers
phoenix buy owner says:
September 17, 2010 at 4:56 am (UTC -6)
Hey man, was just browsing through the internet looking for some information and came across your blog. I am impressed by the information that you have on this blog. It shows how well you understand this subject. Bookmarked this page, will come back for more. You, my friend, ROCK!!!
trance music says:
September 16, 2010 at 8:32 pm (UTC -6)
Trance Music is Interesting Matt Darey
norfolk discount broker says:
September 16, 2010 at 8:00 am (UTC -6)
I just stumbled on your blog when I was lookng on google. I have to say that the information here was the most complete that I found anywhere. I am definitely bookmarking this to come back and read later.
toddler toys says:
December 24, 2010 at 5:52 am (UTC -6)
Buy Soft Toys & Childrens Toy online now!…
Great article.. I really learn a lot after reading it.. Thanks for posting this…..
plan.net says:
December 3, 2010 at 9:31 am (UTC -6)
Healthy diet plan…
Thank you all for your information and comments Regards …….
http://www.bestwaytocleanwoodfloors.info says:
October 28, 2010 at 12:51 pm (UTC -6)
Title…
This is my Excerpt…
auto loan rates says:
October 5, 2010 at 5:08 am (UTC -6)
Thank you……
Beautiful terminology! Inspiring on behalf of each one…
music online player says:
August 31, 2010 at 8:17 pm (UTC -6)
Purchase mp3 music online…
Quite awesome dude! I discovered your website through Search engines searches and I genuinely adore what you happen to be performing! The energy you have put into your putting up is amazing and I hope you retain up with it! Thank you!…
cd duplication says:
August 31, 2010 at 12:54 pm (UTC -6)
Purchase mp3 music online…
A impressive place of duty, was finicky recitation it, cheers……