When people talk about filing for bankruptcy, they are usually referring to Chapter 7 bankruptcy, which allows you to discharge, or eliminate, most of the debts you have. In many cases, filing for bankruptcy under Chapter 7 is the quickest and easiest way for a person who owes a lot of debt to have a “fresh start” of their activities. As long as you are eligible for Chapter 7 bankruptcy relief, and depending on your individual situation, you can become free of all downloadable debts within a few months.
In order to file for bankruptcy under Chapter 7, you must file a petition with your local bankruptcy court, along with several of the required forms listing your income, assets, debts and living expenses. Consequently, it is necessary to provide your bankrupt Sherlock Holmes with a clear and detailed picture of all your financial affairs.
If you have mainly consumer debts, such as those caused by credit cards, the bankruptcy court will require you to submit to a credit counseling with an approved agency, before declaring bankruptcy. You can file for bankruptcy under Chapter 7, individually or jointly with your spouse.
Some of your properties will be “exempt” from bankruptcy proceedings, which means that you will keep them, regardless of the debts you have with your creditors. That the property is exempt will depend on the federal and state bankruptcy laws. Filing for bankruptcy will also result in “automatic detention” against your creditors.
With some exceptions, automatic detention prevents all creditors from attempting to collect their debts while bankruptcy proceedings are in progress. All your creditors will be notified of your bankruptcy filing in court, so that you will be warned that you can not collect your debts during this period of time.
Approximately one month after filing for bankruptcy under Chapter 7, your bankruptcy trustee, or the person appointed by the court to administer your case, will hold a meeting of creditors that you must attend. At that meeting, you have to answer the questions that are asked, both by the trustee and by your creditors, about your financial situation.
The main role of the trustee is to make sure that you comply with all the rules and request information, as well as liquidate any assets that are not exempt. Any asset that is available for settlement will be distributed to your creditors in accordance with bankruptcy laws and in accordance with your order of priority.
However, in many cases there are exempt assets, so there will be no distribution or payment to the creditors.
Finally, unless a creditor objects, or there is something unusual in your financial situation, the bankruptcy court will generally grant you a discharge of everything you owe.
This means that the creditors can not try an action against you to collect the debts you have with them. If all goes well, the discharge can occur in as little as four months. There are a few exceptions where discharge does not occur, but as a rule, the final result of a Chapter 7 bankruptcy is discharge in the vast majority of cases.
This article aims to be useful and informative. But legal issues can be complicated and stressful. A Chapter 7 personal bankruptcy lawyer can address your particular legal needs, explain the law and represent you in court. Take the first step now and contact a qualified lawyer for Chapter 7 personal bankruptcy near you to discuss your specific legal situation.