Columbia Pacific Law Firm, LLC
  • Home
  • Attorneys
    • John Wallpe
  • Bankruptcy Blog
  • Real Estate & Estate Planning
  • ADR / Mediation
  • Location
  • Contact Us
    • Modest Means

Chapter 7 Bankruptcy Basics

3/22/2012

17 Comments

 
Many prospective clients just need to grasp the basics of what exactly bankruptcy is, and what it can and cannot accomplish. There are many great resources available on the Internet to help out.
The following article from Lawyers.com provides a great overview!

http://bankruptcy.lawyers.com/Bankruptcy-Basics/Chapter-7-Bankruptcy-Basics.html

"Bankruptcy is a process that gives a you a financial fresh start, freeing you from overwhelming debt burdens. Chapter 7, also called "liquidation" or "straight bankruptcy," is what many people connect with a bankruptcy case. As a debtor, your assets are sold, creditors receive payment, and you are freed from your debts.

There are several types of bankruptcy, and Chapter 7 is generally the simplest and quickest form. It's available to individuals, married couples, corporations and partnerships. Know what to expect if you file a Chapter 7 case, and how you can have a fresh start within a few months.

Eligibility for Chapter 7 You must be eligible to file for bankruptcy, and the rules vary depending on the type of case you want to file.
Bankruptcy laws changed in 2005, making it harder to qualify for Chapter 7 relief.

There is a means test for individuals to qualify for Chapter 7 bankruptcy. Your income and expenses are examined to see how they compare to the standard for your state.

For example, if you earn less than the median income for a family of your size in your state, you can file for Chapter 7 bankruptcy. If you earn more, a Chapter 13 case may be your option, where you pay part of your debts over time with your disposable income.

Eligibility also includes mandatory credit counseling and budget analysis. This will address the means testing calculations for you. While there are calculators available on the internet, a bankruptcy attorney is often the best resource to help size up your situation and options.

Filing a Chapter 7 Case Bankruptcy starts with filing an official petition, schedules and Statement of Financial Affairs in bankruptcy court. You must provide:

  • A full list of creditors, along with their claim types and amounts
  • The source, amount and frequency of your income
  • A list of all your property
  • A detailed list of monthly living expenses
Collection Efforts Stop Bankruptcy law forces creditors to stop all collection efforts against you as soon as your file. This mechanism is called the "automatic stay" and it's one of the main benefits of bankruptcy. Everything is put on hold, and you get much-needed breathing room.

The automatic stay also prevents creditors from filing new lawsuits against you.

Creditors can ask the bankruptcy judge to lift the automatic stay and let them move ahead with collection efforts or lawsuits. For instance, a creditor could show it needs to take immediate action because property could lose value before your case is closed.

Appointing a Trustee Once you file, a trustee is named to administer your case. Most of the action in your case happens in the trustee's office, not the courtroom. The trustee takes control of your property, unless it's exempt, and starts working through your case.

Exempt Property Is Protected Some property is protected, or exempt from your creditors' claims, and you get to keep it. When determining what is considered exempt, many states allow you to choose and use the state's definition of exempt or the list set out by federal law. Some states require you to use the state's list. Be sure to check your state's laws to find out what applies to your state. 

Exempt property can include these property types:

  • Real estate such as a residence
  • Trade or professional tools, or books
  • Unmatured life insurance contracts
  • Prescription health aids
  • Social Security, veteran's benefits, disability, illness or unemployment benefits
  • Funds from an award in a lawsuit
The 2005 reform laws also limit your options to move to another state to take advantage of more generous exemptions.

Most Chapter 7 cases are "no-asset" cases, which means that you don't have nonexempt property for the trustee to sell and use to pay creditors. Your bankruptcy petition states whether your case is "asset" or "no-asset." If the trustee doesn't agree, he or she must show why the designation isn't correct.

341 Meeting - Questions on Your Debt Twenty to 40 days after filing your petition, the trustee holds a first meeting of creditors, called a "341 meeting." You must be present. You're placed under oath, and the trustee and creditors can ask questions about your property and debts. Creditors seldom ask questions.

The only responsibility you have after the 341 meeting is cooperating with the trustee and providing any requested information or documents.

Creditors have 60 days after the meeting to convince the bankruptcy court they should be paid and your debts shouldn't be "discharged."

Reaffirming Debts You can also be approached about "reaffirmation" of debts. This is an agreement between you and the creditor that you'll pay off your debt and keep the property, such as a car.

Time Limits Apply to Reaffirm Bankruptcy reforms changed the rules for reaffirming debts, too. Now you have to declare your dedication to a loan within 45 days after the 341 meeting. You can't just continue to make loan payments as they come due.

Purchase Option There is also a purchase option you can use within 45 days of the 341 meeting. For example, you could buy your car by paying the loan balance within that 45 days. This option isn't used much, because most people who file for bankruptcy don't have that kind of money.

Steps to Reaffirm a Debt If you decide to reaffirm a debt, you must file an agreement with the court. The agreement has to disclose:

  • Your income and expenses so the court can see that you have enough money to pay the debt
  • That you were advised of the amount of the debt you are reaffirming
  • How the debt was calculated and;
  • Your understanding that the debt will not be discharged
Unless you are represented by an attorney, the court must approve the agreement. If the court disapproves, there's a hearing on the issue.

If an attorney represents you, he or she must certify in writing that you were advised of the legal impact of the agreement, you were fully informed, the agreement is voluntary, and reaffirmation won't create an undue hardship on you or your family. 

Discharge and Freedom from Debt Your objective in bankruptcy is discharge, or the court's order to end your liability for your debts, and your creditors' ability to seek further payment. If creditors haven't persisted in trying to get money from you and the trustee within 60 days of the 341 meeting, your debts that existed before the filing date are discharged or canceled.

There are exceptions to discharge, and your attorney can help you determine which debts you may still have to pay. Here is how common debt types may be treated in a Chapter 7 case: 

What debts are discharged in Chapter 7?
Usually Dischargeable
  • Personal loans 
  • Credit cards
  • Repossession deficiencies
  • Auto accident claims
  • Judgments
  • Business debts
  • Leases
  • Guaranties
  • Negligence claims
  • Possibly Dischargeable
  • Property settlements or division of debts in divorce
  • Willful and malicious injuries to others
  • Embezzlement
  • Debts incurred by fraud or dishonesty
  • Debts arising from breach of fiduciary duty
    For debts not to be discharged, creditors must ask the court to decide what they want done with them. If a creditor doesn't ask for a debt to be paid back, they will be canceled.
  • Not Dischargeable
  • Recent taxes
  • Trust fund taxes
  • Child or family support
  • Criminal fine or restitution
  • Auto accident claims involving intoxication
  • Debts not scheduled
  • Penalties payable to the government other than tax penalties
  • Student loans
  • Debts listed in prior bankruptcy where debtor was denied a discharge
  • from Dischargeable Debts

    Denial and Revocation of DischargeCreditors or the trustee can also object to discharge, or seek revocation of discharge, but it's uncommon. Grounds to deny or revoke discharge can include fraud, such as your failure to disclose property, or giving false information during your case. 

    Take your time when deciding whether to file - the law says you can't file again for two years. If you make the right decisions, it's a quick, efficient way to get a fresh financial start."


    -http://bankruptcy.lawyers.com/Bankruptcy-Basics/Chapter-7-Bankruptcy-Basics.html

    17 Comments
    fast pay day loan link
    8/6/2012 03:11:43 pm

    I have been intelligent for hours and I haven't gone through such awesome stuff.

    Reply
    instant pay day loans link
    8/6/2012 03:14:33 pm

    I Bed your articles guys have it up.

    Reply
    newcastle singles link
    8/26/2012 03:04:18 pm

    Great blog post.

    Reply
    utah divorce lawyers link
    1/1/2013 02:53:06 pm

    The rule was created in order to prevent conflicts of interest. In the adversarial system of justice, a lawyer has a duty to be a zealous and loyal advocate on behalf of the client, and also has a duty to not bill the client excessively. Also, as an officer of the court, a lawyer has a duty to be honest and to not file frivolous cases or raise frivolous defenses. Thanks.

    Reply
    Carsoncity-dui-attorney.com link
    7/18/2013 07:11:00 pm

    That's really good to know that CPLF can also review the Real Property leases and assist in bankruptcy issues.

    Reply
    fat loss factor plan reviews link
    3/26/2013 05:34:21 pm


    If some one needs expert view concerning blogging after that i advise him/her to pay a quick visit this web site, Keep up the nice job.

    Reply
    DUI lawyer in Tahoe link
    8/7/2013 08:17:00 pm

    Bankruptcy gives a you a financial fresh start, freeing you from overwhelming debt burdens and our attorney can help you determine which debts you may still have to pay.

    Reply
    Attorneys Reno link
    8/13/2013 02:50:15 pm

    Yes totally correct that There are several benefits to filing for bankruptcy - legally, financially and emotionally.

    master s dissertation link
    4/15/2013 11:22:43 pm

    For private households, it is argued to be insufficient to merely dismiss debts after a certain period. It is important to assess the underlying problems and to minimise the risk of financial distress to re-occur. Thanks.

    Reply
    Glendale Arizona real estate link
    4/25/2013 06:57:54 pm

    All of the money you have invested in it by means of a down payment, home repairs as well as interest accrued over the time you have had the loan is money that needs to be calculated when generating an asking price in which to list the home for on the real estate market. Thanks.

    Reply
    oakville real estate agent link
    8/18/2013 11:54:44 pm

    Most mortgage contracts allow the lender to make tax payments on behalf of the borrower should the borrower fail to make them. If you don't make the payments, the lender can step in, make them for you and then add the amount to the mortgage with additional penalties and fees. It can also take the more aggressive step of placing a lien on your property and beginning foreclosure. Thanks a lot.

    Reply
    John link
    8/28/2013 04:52:08 am

    Was just looking for a site like this, thanks

    Reply
    Sparks NV DUI Attorney link
    9/24/2013 10:18:58 pm

    Hi John, You posted a good explanation of Bankruptcy, Its language is so easy that anyone can understand the points on first read. Good Job.

    Reply
    Joey Atlas Scam link
    9/25/2013 12:14:14 am

    You must be present. You're placed under oath, and the trustee and creditors can ask questions about your property and debts. Creditors seldom ask questions. Thanks for this info.

    Reply
    consider this method link
    10/30/2013 03:31:46 pm

    While there are calculators available on the internet, a bankruptcy attorney is often the best resource to help size up your situation and options.

    Reply
    quick loans link
    6/15/2015 09:30:32 pm

    This is very useful post about bankruptcy. Got to know some new facts.

    Reply
    Moniqo link
    8/17/2015 09:20:58 am

    Weill, even 50 cent has proved that filing a bankruptcy is not a big deal if you know what you are doing.

    Reply



    Leave a Reply.

      Author

      John Wallpe has been admitted to practice law in both Oregon and California. Mr. Wallpe's practice includes general civil litigation, consumer law, real estate law and bankruptcy..

      Archives

      May 2018
      April 2012
      March 2012

      Categories

      All
      Bankruptcy
      Celebrities
      Debt

      RSS Feed

    Powered by Create your own unique website with customizable templates.