When you think about bankruptcy, you’re usually thinking about Chapter 7. Though there are many excellent reasons to choose Chapter 13 if you’re looking to the federal court system to get out of debt, the vast majority of people look to Chapter 7 as the bellweather.
Chapter 7 bankruptcy is designed for individuals (and married couples) who can’t pay their bills. If your monthly income less your regular monthly expenses doesn’t leave you with enough money to make significant payments to your creditors then you’re definitely looking at a Chapter 7 scenario.
That’s not to say that you’ve got the ability to live large and then blame your problems on your high expenses. If you’re looking to get out of debt with bankruptcy then your lawyer and, ultimately, your Chapter 7 bankruptcy trustee will be looking over your monthly expenses to make sure you’re not playing fast and loose with the system.
The Point Of Chapter 7 Bankruptcy
When your case is filed, a Chapter 7 bankruptcy trustee is appointed to take control of all property that is not specifically exempt; you get to keep many types of property because the law lets you keep it. In return, the court allows you to wipe out many types of debts.
Generally, you will be able to wipe out the following types of debts in Chapter 7:
- credit cards
- store cards
- medical and dental bills
- unsecured personal loans
- certain taxes
There are other types of debts that may be able to be discharged (wiped out), but this is just a broad overview.
Your lawyer will go through your debts with you and let you know what you’ll remain liable for at the end of the case.
Your Property In Chapter 7 Bankruptcy
You probably read about the Chapter 7 bankruptcy trustee taking control of your property and immediately felt your chest clench in anticipation and anxiety. In the words of Douglas Adams, don’t panic. In fact, most people who file Chapter 7 bankruptcy get to keep all of their personal belongings.
The reason for this is simple. If you’re going to be filing for bankruptcy then you’re going to want to have a good lawyer working with you. That lawyer’s going to be able to tell you if you’d lose something in a Chapter 7; if so, chances are pretty good that you’ll either decide against bankruptcy or file a Chapter 13 instead.
See? It’s a self-fulfilling prophesy.
Articles of interest for New York residents:
Articles of interest for California residents:
How Long Chapter 7 Bankruptcy Lasts (And What’s Involved)
The actual Chapter 7 bankruptcy process lasts about 90-120 days from the day your case is filed with the U.S. Bankruptcy Court. The steps involved are as follows:
- bankruptcy case is filed electronically with the U.S. Bankruptcy Court;
- clerk of the court sends out notices to all creditors, debt collectors and lawyers of the fact that your bankruptcy case has been filed, the case number, and other information (this is done electronically if the creditor has an email address on file with the court, and by regular mail in all other cases);
- a date is scheduled for your Meeting of Creditors (this meeting usually takes place 4-6 weeks after the filing of your Chapter 7 bankruptcy case);
- you appear (with one of our lawyers) at your Meeting of Creditors;
- you complete your financial management certification, and our office files the certificate with the court; and
- the court issues to you a Discharge of Debtor, which signals the end of your case and your legal release from liability for paying any of the debts discharged in your Chapter 7 bankruptcy case.
Some articles you may find interesting are as follows:
- Lawyers File Bankruptcy Cases Electronically On The Internet by my colleague Susanne Robicsek of Charlotte, NC
- Meeting of Creditors Explained by my colleague Kimberly Kempinski of Philadelphia, PA
- Financial Management Course for Bankruptcy Explained
The Best Way To Find The Right Solution For You
You’ll never know which option is right for you until you talk with someone who understands the Chapter 7 bankruptcy process.
Take the first step in getting answers to your questions by setting up a free, no-obligation phone consultation. You can also give us a call at 866-787-8078 x710 during normal business hours.