Chapter Seven Bankruptcy
There are two alternatives for filing personal bankruptcy as a individual, chapter 7 and chapter 13 bankruptcy. Chapter 7 is often referred to as liquidation as all of your unexempted property is sold in order to pay off your creditors. Exempt belongings is that property that the government allows you to keep in order to live your life normally, like a automobile, clothes, furniture to sit on, etc. Each state has their own bankruptcy exemptions, as well as the Federal bankruptcy exemptions that can be used in some states.
In order to be able to file a chapter 7 bankruptcy petition, have to be an individual, not a business or farm, you must have completed a credit counseling course from an licensed agency inside the 180 days before filing for bankruptcy relief, and pass the means test which is filled out with your petition.
In a chapter 7 petition, you will have to file schedules that list your debts, property, household income and living expenses. The bankruptcy court may also request to see tax returns, pay stubs and credit counseling certificate. Married bankruptcy filers must provide the spouses information even if they are not going to be filing bankruptcy together so the court can determine the households ability to pay the debts.
When finishing your petition, you will have the option to keep paying and saving your property if you are able to, such as your house or automobile, by making a reaffirmation agreement with the company that holds the debt. By reaffirming the debt you are admitting that you intend to make payments. If the trustee approves 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 up 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, creditors cannot call, collect or file lawsuits. Each of your debts will be advised that you have filed bankruptcy and given a chance to respond. A 341 meeting will happen within 20-40 days. 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. Within 10 days of the meeting the trustee will rule on whether the case should be presumed as abusive under the means test. If the trustee finds a presumption of abuse you can be forced to file ch 13 instead.
The bankruptcy trustee is then responsible for liquidating your assets that are not exempt, meaning they are not protected by filing bankruptcy, and giving the proceeds from the sales to your unsecured creditors. Once liquidation is completed, you are granted a discharge wiping out your debts.
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