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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.
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