Chapter 7 is also called straight bankruptcy or liquidation bankruptcy. It’s the type most people think about when the word “bankruptcy” comes to mind. In a nutshell, the court appoints a trustee to oversee your case. Part of the trustee’s job is to take your assets, sell them and distribute the money to the creditors who file proper claims. The trustee doesn’t take all your property. You’re allowed to keep enough “exempt” property to get a “fresh start.” Preparing for Chapter 7Before a case is filed, you’ll have to gather all of your financial records like bank statements, credit card statements, loan documents, and paystubs. You’ll use that information to fill out the bankruptcy petition, schedules, statement of financial affairs, and other documents that will be filed with the court. You can download copies for free from the website maintained by the U.S. Courts. Your attorney will use bankruptcy computer applications to produce them. Broadly, these documents include the voluntary petition for relief, the schedules of assets and liabilities, declarations regarding debtor education, and the statement of financial affairs. These documents require you to open up your financial life to the bankruptcy court. They include a listing of all of your property, debts, creditors, income, expenses, and property transfers, among other things. Once completed, you’ll file it with the clerk of your local bankruptcy court and pay a filing fee. If you’re interested in finding your local court, visit the federal court locator page, choose “Bankruptcy” under “Court Type” and add your location in the bottom box. Credit CounselingAlmost every individual debtor who wants to file a Chapter 7 case has to participate in a session with an approved credit counselor before the case can be filed. This can be in person, online or over the telephone. The rationale behind this requirement is that some potential debtors don’t know their options. A credit counselor may be able to suggest alternatives that will keep you out of bankruptcy. You can get more information about this requirement on the website for the U.S. Trustee. How the Means Test Affects BankruptcyA debtor must also successfully pass the means test calculation, which is another document that must be completed prior to filing for bankruptcy. This test, which was added to the Bankruptcy Code in 2005, calculates whether you are able to afford, or have the “means” to pay at least a meaningful portion of your debts. The means test compares your income with the median income for your state. If you fail the means test, you can only file Chapter 7 bankruptcy under very specialized exceptions. Your alternative would be to file a Chapter 13 repayment plan case. You can learn more about the means test and the numbers used in the calculation from the U.S. Trustee website. Meeting of CreditorsAfter a Chapter 7 bankruptcy is filed, the court will issue a document giving notice of a debtor’s meeting of creditors. This notice is also sent to all of the creditors that are listed within the bankruptcy documents. During the meeting of creditors, the bankruptcy trustee will ask the debtor various questions about the bankruptcy, such as whether all of the information contained within the bankruptcy documents is true and correct. The trustee may ask other questions about a debtor’s financial affairs. If the trustee wishes to investigate the bankruptcy further, they may continue the meeting of creditors on a future date. It is important to note that at the meeting of creditors, as the name suggests, any creditor may appear and ask a debtor questions about his bankruptcy and finances. In reality, however, the only creditors who appear regularly are car creditors (to ask what you intend to do about your car payments) and the IRS (to ask when you’re going to pay back those non-dischargeable taxes). Seizure of AssetsIf you have any nonexempt property, the bankruptcy trustee has the ability to seize and sell the property. Exemptions refer to federal or state statutes that allow you to protect certain types of property when you file bankruptcy. For example, exemptions exist to protect retirement accounts, such as a 401(k) plan. Any assets that the trustee can recover are distributed to creditors. Before most debtors can receive a discharge, they will have to take a course in financial management. This class is likely taught by the same group that you used for the credit counseling. Plan to spend about two hours in person, online, or on the telephone. Debtor’s DischargeIf the trustee and the creditors do not object to the debtor’s discharge, the bankruptcy court will automatically give the debtor a discharge at some point after the last day to object. The last day to file a complaint objecting to a debtor’s discharge is 60 days after the first session of the meeting of creditors. If no complaint is filed, the discharge is usually entered several days later. The discharge prevents creditors from attempting to collect any debt against you personally that arose prior to the filing of the bankruptcy. Thus, for all intents and purposes, the discharge effectively wipes out debts. However, it is important to note that not all debts are dischargeable, including certain taxes and child or spousal support obligations. Furthermore, a bankruptcy discharge is personal. This means that a creditor can still collect on a discharged debt from a co-debtor that did not file for bankruptcy. A creditor with collateral may also be able to use that collateral to satisfy some of that outstanding debt. Bankruptcy MythsFiling for bankruptcy can be a traumatic experience, particularly for people who believe some of the “myths’’ that supposedly surround the process. Some of the myths include: • Losing Everything: Actually, the majority of Chapter 7 filings are “no-asset cases,” meaning the debtor gives up no possessions. The law allows you to retain basic assets necessary for day-to-day life, like your house, car, computers or other equipment needed for you to work. These are called exemptions. Beyond that, it’s likely that creditors won’t want the possessions that aren’t covered under exemptions. Cons Requirements for Chapter 7 BankruptcyHere are five strong signs that indicate you qualify for bankruptcy: Preparing for BankruptcyThere’s some protocol to follow in the months before filing for bankruptcy. Failing to follow these instructions could undermine your efforts. • Be Truthful: You are required, while filing for bankruptcy, to provide full and complete information. You must disclose any debt, assets, accounts or other financial information. Failure to comply could lead to fraud and potential criminal charges. Once you qualify to file for Chapter 7 bankruptcy, it will take up to four months to complete the bankruptcy process. The most important factor is finding an experienced and reputable bankruptcy attorney. Chapter 7 Bankruptcy Lawyers Free ConsultationWhen you need legal help with a bankruptcy in Utah, please call Ascent Law LLC now at (801) 676-5506. We want to help you now. Come in or call in for your free initial consultation.
Ascent Law LLC
8833 S. Redwood Road, Suite C West Jordan, Utah 84088 United States Telephone: (801) 676-5506
Ascent Law LLC
4.9 stars – based on 67 reviews
Good Resources On Estate Planning Trusts File Bankruptcy Or Try To Settle? via Michael Anderson https://www.ascentlawfirm.com/when-to-file-for-chapter-7-bankruptcy/
0 Comments
Leave a Reply. |
ABOUT USDivorce Lawyer in Orem, Utah. If you need divorce and bankruptcy lawyer, child custody, adoption or family law attorney who does child custody, father’s rights, divorces and family law that cares about you, your family, your case, and is aggressive, call 801-676-5506 now for a free consultation for divorce in Orem, Utah can be tough, so you need a smart divorce lawyer who can help you today. Call 801-676-5506 for the top divorce and bankruptcy attorney in Orem, Utah now. Archives
April 2023
Categories |