The term Chapter 7 Bankruptcy comes from the federal statute that contains this particular section of Bankruptcy code. Attorneys have named this form of bankruptcy "Straight Bankruptcy" because it cancels your unsecured non-priority debts.
The primary purpose of this form of bankruptcy is to give an honest debtor a fresh financial start. Upon filing the petition with the Bankruptcy Court , the bankruptcy gives the petitioner (person(s) or entity that signs the bankruptcy papers) protection under §362 of the Bankruptcy Code. This is called an "Automatic Stay". The Automatic Stay immediately stops creditors from attempting to collect any debt. Therefore, your assets are protected by the Bankruptcy Court for the duration of the case or until the Bankruptcy Court Judges gives creditor(s) permission to attempt collection against this assets. Furthermore, the Automatic Stay will stop most legal proceedings and all collection efforts. It will even stop a pending case (like a foreclosure) against you.The Automatic Stay part of the code is somewhat backwards to conventional legal wisdom. Normally, a case is filed and a petitioner does not receive their "remedy" until the end of the case. Bankruptcy is backwards in the sense that a petitioner receives their "remedy" upon filing the case with the court .
After the case is filed with the court, the Chapter 13 Trustee or the Office of the United States Trustee will assign a location, date, and time for the Creditor's Meeting. Although this is called a Creditor's Meeting, very few creditors appear at this meeting. It is standard for your attorney to appear with you at the Creditors Meeting and for you to be questioned by the case Trustee. These questions are the same questions that you are asked by your bankruptcy attorney at his or her office to file your case initially.
If the case trustee requires further information, your case may be adjourned to a future date to allow you and your attorney to provide to the case trustee the additional information. After that information is received, and there are no un-exempt assets the recommendation is normally made by the case trustee to the court for the case to be deemed "no asset". In other words, there are no assets for the Trustee to collect, liquidate and distribute to creditors and account to the court. If, however, your case is deemed an "asset" case, the trustee will be responsible for collecting, liquidating, and distributing those assets to creditors and then accounting to the court for all the monies involved. In a no asset case, the case normally stay opens 2 months after the Creditor's Meeting for any creditors to object. The typical objection is when a debtor runs up their credit cards within a few months of filing the bankruptcy. Anytime that a creditor feels that a debtor has used their credit without having the intent of paying it back at the time, a creditor can object to their discharge. In other words, they can ask the court to not discharge the particular debt in question. Therefore, this debt would remain for the client to pay in the future.
If the case is set up correctly, then 99% of the time, there is no objection and the discharge is granted by the court. Once the discharge order is signed by the judge and the order is de, all of the unsecured debts listed by the client are extinguished.
Many times clients do not wish to provide all of their debts to their attorney. This is a very bad idea for many reasons. The law requires that all of the debts be included. You do not receive your full benefit of bankruptcy if you do not include them.
Many of your creditors will discontinue your credit line if you file a bankruptcy and do not include them. If the trustee or court finds out that you did not include these debts, they will require you to amend in these debts and this may cost you additional fees. Once your bankruptcy is closed, it is much more difficult to make the bankruptcy effective as to these creditors that were not included. While you are in bankruptcy, the case trustee technically has jurisdiction over all of your finances. Therefore, you should not purchase or sell any property.
The trustee will specifically ask you if you have transferred any personal property in the last year or any real estate within the last six years. In other words, the bankruptcy code and state laws look towards the past for the transfer of assets out of your financial estate. The trustee does have the power to go after those assets. Further, under certain circumstances it could be considered fraud if you transfer property purposely out of your financial estate in an attempt to defraud creditors .
Should you have property that cannot be protected by the laws for your particular state, you have a choice of surrendering that property to the trustee or "buying out" the trustee's interest in that property. Very few people actually lose property in a Chapter 7 if they have expert bankruptcy advise for their particular jurisdiction.
Secured property is when you have pledged collateral for the loan or note. The most common examples of secured loans are houses and motor vehicles. In most cases, clients want to keep their house and car; therefore, in Chapter 7 they simply continue to make the payments to the secured creditors.
If you have a lease, you continue making that payment and keep that property or we can sever the legal relationship between you and the creditor so you are not obligated under the lease.
In rare instances, if you change your mind after filing a Chapter 7, you can ask the court to dismiss your case. However, the court will require you to guarantee payment in full to all of your creditors and may not dismiss your case until this is done.
Once the court issues you the discharge order, the bankruptcy process is over. Your debt is wiped out, and you are not legally responsible. You cannot file a Chapter 7 again for another 6 years from the date of discharge. However, it is possible to file a Chapter 13 at nearly any time after the Chapter 7 is discharged.
A BANKRUPTCY IS ABOUT STARTING A NEW FINANCIAL LIFE
BANKRUPTCY ATTORNEY'S ARE ABOUT HELPING YOU OBTAIN THAT NEW FRESH FINANCIAL START!
Once you file, we will help stop:
• Lawsuits
• Creditor harassment
• Repossession
• Sheriff's sale
• IRS executions
• Garnishments
• Foreclosures
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