CHAPTER 7
Chapter 7 Consumer Liquidation Bankruptcy generally
applies when the monthly payment on all personal overhead (rent/car
payment/utilities/groceries) exceeds or nearly exceeds your take home
income.
The term Chapter 7 Bankruptcy comes from the federal
statute that contains this particular section of the bankruptcy code.
Lawyers call this form of bankruptcy "straight bankruptcy" because it
cancels out most of your debts.
One of the primary purposes of
bankruptcy is to discharge certain debts to give an honest individual
debtor a "fresh start." The bankruptcy discharge has the effect of
extinguishing the debtor's personal liability on dischargeable debts.
Although the filing of an individual chapter 7 petition usually results
in a discharge of debts, an individual's right to a discharge is not
absolute, and some types of debts are not discharged, i.e most student
loans, taxes, child/spousal support... Moreover, a bankruptcy discharge
does not extinguish a lien on property.
A Chapter 7 Bankruptcy generally takes from 4 to 6 months to complete, costs $209 to file, and usually only takes one trip to the court house.
Filing bankruptcy puts into effect the "automatic stay" The automatic stay immediately stops your creditors from trying to collect what you owe them. So, at least temporarily, creditors will not be able to go after your car, bank accounts, house, other property or garnish your wages. Further, the automatic stay will stop most legal proceedings that may be running against you.
Until your bankruptcy case ends, your financial problems will be in the hands of the trustee of the bankruptcy court. The court assumes legal control of the property you own (except for exempt property) and the debts that you owe as of the date you file. Nothing can be sold or paid without the court's consent. You have control, with a few exceptions, of property or income that you acquire after you file for bankruptcy.
A bankruptcy court operates through an appointed person called a "bankruptcy trustee." The trustee goes through the papers that you file with the court, and he asks you a few questions at a short hearing called a "creditors meeting." Creditors may attend this meeting, but rarely do.
After the meeting, the trustee collects the property that can be taken from you (your nonexempt property) to be sold to pay creditors. You can surrender the property to the trustee, pay the trustee its fair market value, or, if the trustee agrees, swap exempt property for nonexempt property. Very few people actually lose property in the bankruptcy.
If you have pledged property as collateral for a loan, the loan is called a secured debt. The most common examples of collateral are houses and motor vehicles. In most cases, you will have the choice to surrender the collateral and wipe out the debt or make payment arrangements to keep the collateral.
At the end of the bankruptcy process, most of your debts are wiped out by the court. You no longer legally owe your creditors. You can't file for Chapter 7 bankruptcy again for another 8 years under the Bankruptcy Reform Act taking effect 10-17-05.
A Chapter 7 Bankruptcy generally takes from 4 to 6 months to complete, costs $209 to file, and usually only takes one trip to the court house.
Filing bankruptcy puts into effect the "automatic stay" The automatic stay immediately stops your creditors from trying to collect what you owe them. So, at least temporarily, creditors will not be able to go after your car, bank accounts, house, other property or garnish your wages. Further, the automatic stay will stop most legal proceedings that may be running against you.
Until your bankruptcy case ends, your financial problems will be in the hands of the trustee of the bankruptcy court. The court assumes legal control of the property you own (except for exempt property) and the debts that you owe as of the date you file. Nothing can be sold or paid without the court's consent. You have control, with a few exceptions, of property or income that you acquire after you file for bankruptcy.
A bankruptcy court operates through an appointed person called a "bankruptcy trustee." The trustee goes through the papers that you file with the court, and he asks you a few questions at a short hearing called a "creditors meeting." Creditors may attend this meeting, but rarely do.
After the meeting, the trustee collects the property that can be taken from you (your nonexempt property) to be sold to pay creditors. You can surrender the property to the trustee, pay the trustee its fair market value, or, if the trustee agrees, swap exempt property for nonexempt property. Very few people actually lose property in the bankruptcy.
If you have pledged property as collateral for a loan, the loan is called a secured debt. The most common examples of collateral are houses and motor vehicles. In most cases, you will have the choice to surrender the collateral and wipe out the debt or make payment arrangements to keep the collateral.
At the end of the bankruptcy process, most of your debts are wiped out by the court. You no longer legally owe your creditors. You can't file for Chapter 7 bankruptcy again for another 8 years under the Bankruptcy Reform Act taking effect 10-17-05.