Chapter Seven Bankruptcy
There are two choices for filing 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 continue living a normal life, like a auto, clothes, furniture to sit on, etc. Every state sets their bankruptcy exemptions, as well as a set of Federal exemptions that can be used in some states.
In order to legally to file a ch 7 petition, cannot be a business or farm, must be an individual, you must take a credit counseling course from an authorized agency within the 180 days before filing for bankruptcy relief, and qualify the means test which is filed with your petition.
In a chapter 7 petition, you will have to file statements that list your debts, belongings, income and living expenses. The bankruptcy court may also request to see tax returns, pay stubs and credit counseling certificate. Bankruptcy filers who are married must provide the spouses data even if they are not filing bankruptcy together so the court can determine your ability to pay the debts.
When finishing your petition, you will have the option to keep paying and holding onto your property if you are able to, such as your domicile or automobile, by making a reaffirmation agreement with the creditor. By reaffirming the debt you are recognizing that you intend to make payments. If the trustee approves your reaffirmation agreement, the creditor may be able to file a lawsuit against you if you do not pay in the future.
When you file your chapter 7 bankruptcy document you will have to give a filing fee of $299. This cost can be paid in installments, up to 4 no later than 120 days after filing. 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 advised that you have filed bankruptcy and yielded a chance to reply. Within 20-40 days a 341 meeting will be called. During this group meeting, the creditors and trustee can ask you questions.The trustee then rules on the presumption of abuse of your case. If the trustee finds a presumption of abuse you can be forced to file ch 13 instead.
The trustee then liquidates your assets if any are not exempt and gives the profits to creditors. Once assets are liquidated, if there are any, then the trustee will grant the debtor a bankruptcy discharge which absolves the debtor, you, from owing what is left to your creditors, basically wiping out your debt.
