Chapter 7 Bankruptcy
Chapter 7 Bankruptcy is the most common form of bankruptcy. It is commonly known as liquidation bankruptcy. In most cases, once the bankruptcy is filed with the court ,most common types of creditor collection actions are stopped including harassing calls, threatening letters by attorneys, and lawsuits to collect payment for credit card and health care bills.
About 60 days after your creditors meeting (341 meeting) you will receive a Notice of Discharge from the court. Debts that will be discharged mean you will no longer be responsible for repaying them. These debts include
1· Credit card debts
2· Medical bills
3· Lawsuit judgments
4· Debts arising from car accidents
5· Obligations under leases and contracts
6· Personal loans and promissory notes
Who can file for Chapter 7 Bankruptcy?
Not everyone qualifies for Chapter 7 bankruptcy. Eligibility is determined by your annual income and whether it exceeds the median income for your geographic area as determined by the IRS. If your annual income exceeds the median income for your geographic are, you still may be eligible if you pass the means test.
Individuals, joint debtors or businesses that do not qualify for Chapter 7 may still be able to file for Chapter 13 Bankruptcy.
How does the Chapter 7 Bankruptcy process work?
You begin your case by filing your bankruptcy papers with the court after receiving a certificate from a federally approved credit counseling center (Mandatory Credit Counseling). The court will then notify the creditors that you have filed for bankruptcy and the federal court will order an automatic stay in which all collections and lawsuits will be put on hold.
The case is then assigned to a trustee. The trustees job is to review your paperwork and take possession of any nonexempt property and liquidate the property in order to distribute the funds to creditors. Most if not all property will be exempt in a typical Chapter 7 bankruptcy filing. You may also be able to keep certain assets that are nonexempt through other agreements with the creditor or the trustee.
After filing, a creditors meeting is held often called the 341 meeting. The creditors meeting is usually the only personal appearance most filers make. Creditors may appear at the meeting regarding certain debts however, creditors rarely attend the 341 meeting. The trustee will ask the debtor several questions regarding the papers work, and the entire meeting usually only lasts several minutes.
After the 341 meeting, your property is dealt with and you must undergo a personal financial management counseling meeting. Other issues that may arise are also dealt with at this time.
The court grants you a discharge roughly 90 days after you file and you are no longer liable for debts that were discharged from your bankruptcy proceeding.
Should I File for Chapter 7 Bankruptcy?
There are many considerations that need to be taken into account before filing for bankruptcy. For example, if bankruptcy will not help you with your current debt problems because most of your debts are not dischargeable or you will lose some valuable property that you wish obtain, then Chapter 7 bankruptcy may not be the best option.
Call The Law Office of Rami N. Nabi for a free initial consultation to determine whether filing for Chapter 7 bankruptcy is the best option for you.