Chapter 7 Bankruptcy
What is “Liquidation Bankruptcy”?
Chapter 7 Bankruptcy, sometimes called “liquidation bankruptcy” or “straight bankruptcy” is generally the simplest and quickest form of bankruptcy. Chapter 7 Bankruptcy is available to individuals, married couples, corporations and partnerships. With Chapter 7 Bankruptcy you turn over all of your non-exempt property to the bankruptcy trustee who then converts it to cash for distribution to your creditors. Most people have no assets to offer to pay off creditors; in this case Chapter 7 Bankruptcy will give you a clean slate, in a relatively quick manner.
The main purpose of Chapter 7 Bankruptcy is to discharge certain debts, so that you can have a “fresh start.” You will have no personal liability for discharged debts after the filing and completion of your Chapter 7 Bankruptcy case. In a Chapter 7 Bankruptcy case, however, a discharge is available only to individual consumers, not to partnerships or corporations.
What Do I Need To Provide To File Chapter 7 Bankruptcy?
In order to complete and file Chapter 7 Bankruptcy, you must provide the following information:
- A list and some background detail on all creditors (amount owed, date incurred)
- Information and detail regarding the Chapter 7 Bankruptcy, and your income.
- A list of all of your property.
- A detailed list of your monthly living expenses, i.e., food, clothing, shelter, utilities, taxes, transportation, medicine, etc.
- Driver License
- Social Security Card
- A Copy of Your Taxes From the Year Prior to Filing
- A Valid Certificate of Credit Counseling
Married individuals must provide some of this important information for their spouse regardless of whether they are filing Chapter 7 Bankruptcy as a joint petition, separate individual petitions, or if just one spouse is filing chapter 7. In a situation where only one spouse files Chapter 7 Bankruptcy, the income and expenses of the non-filing spouse is required so that the court, the trustee and creditors can evaluate the entire household’s financial circumstances.
What is the Process of Chapter 7 Bankruptcy?
After you have filed for Chapter 7 Bankruptcy an “automatic stay” is ordered which stops, collection actions against you, and your property. The automatic stay goes into effect right away, the moment you file your bankruptcy, giving you immediate relief from creditors.
The Chapter 7 Bankruptcy stay is essentially a civil restraining order precluding creditors from taking any collection action without specific permission from the bankruptcy court. As long as the bankruptcy stay is in effect, creditors generally may not initiate or continue lawsuits, wage garnishments, or even telephone calls demanding payments. The bankruptcy clerk generally is the one to formally give notice to creditors by serving on them the Notice of Bankruptcy Filing.
About 30 days after the Chapter 7 Bankruptcy petition is filed, the bankruptcy trustee will conduct a “meeting of creditors.” You are required to attend this meeting and provide truthful answers to the bankruptcy trustee’s questions (and questions from creditors if applicable). During this meeting of creditors, the Chapter 7 Bankruptcy trustee will ask you questions about assets, liabilities, income, and expenses. Don’t let the name fool you though, it is very uncommon for any creditors to actually show up.
After the Chapter 7 Bankruptcy debtor has his or her meeting with the bankruptcy trustee, and the trustee is satisfied the information contained in the Chapter 7 Bankruptcy is true and correct, the individual debtor becomes eligible for a chapter 7 discharge. A typical chapter 7 bankruptcy takes a total of about six months from the initial filing to the discharge.
Benefits of Chapter 7 Bankruptcy
- Stop Creditor Harassment
- Start to Rebuild Your Credit
- Stop Garnishments
- Relatively Inexpensive
- Eliminate Repossession Debts
Let Us Assist You with Bankruptcy
McFarlin LLP has a great deal of experience with Chapter 7 Bankruptcy. We have represented thousands of clients in chapter 7 and can offer you the best possible service at a reasonable price. We offer prospective clients a free consultation to discuss the process to file Chapter 7 Bankruptcy and answer any questions that you may have. Contact us today (888) 728 0044, or email us.
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