Chapter Seven Bankruptcy
There are two alternatives for filing bankruptcy as a consumer, chapter 7 and chapter 13 bankruptcy. Chapter 7 is often called liquidation as all of your property that is not exempt is sold in order to pay off your debts. Exempt property is that property that the bankruptcy court allows you to keep in order to continue living a normal life, like a car, clothes, furniture to sit on, etc. Every state sets their bankruptcy exemptions, as well as Federal exemptions that can be used in some states.In order to legally to file a ch 7 petition, you must be an individual, you must complete a credit counseling course from an approved agency within the 180 days before filing for chapter 7 bankruptcy relief, and qualify the means test which is completed with your bankruptcy petition.In a ch 7 bankruptcy petition, you will have to file schedules that list your debts, belongings, household income and bills. Copies of tax returns, pay stubs and credit counseling certificate will also have to be filed. Bankruptcy filers who are married must provide the spouses information even if they are not going to be filing bankruptcy together so the bankruptcy court can determine your ability to pay the debts.When completing your petition, you will have the option to keep paying and holding onto your property if you are able to, such as your home or car, by making a reaffirmation agreement with the company that holds the debt. By reaffirming the debt you are acknowledging that you intend to make payments. If the trustee sanctions your reaffirmation agreement, the creditor may be able to repossess the property if you do not pay.When you file your ch 7 bankruptcy papers you will have to pay a filing fee of $299. This fee can be paid in installments, up to 4 no later than 120 days after filing your petition. Once you file, the bankruptcy stay is in effect, and your creditors cannot try to collect on the debts or continue lawsuits, or wage garnishments. Each of your creditors will be given notice that you have filed bankruptcy and yielded a chance to reply. A meeting of the creditors, a 341 meeting, will be called within 20-40 days of filing the petition. During this meeting, the bankruptcy trustee and your creditors may ask you questions under oath about your debts, assets, income, expenses and your ability to pay.The trustee then rules on the presumption of abuse of your case. If your case is presumed to be abusive you will be given a chance to refile under chapter 13.The trustee then liquidates your assets if any are not exempt and gives the profits to creditors. After liquidation a discharge is granted to you, which wipes out the rest of your debts.
