Chapter 7 Information

Chapter 7 bankruptcy is the quickest, simplest, and typically the cheapest bankruptcy a person can file. Because it is so simple and broad in scope, most people who need to file a bankruptcy usually end up filing under Chapter 7.

Please fill out our Bankruptcy Questionnaire for a free case evaluation
and see if you qualify for a Chapter 7 bankruptcy.

Many people believe that because Chapter 7 bankruptcies are so simple and so popular, that it is the best bankruptcy someone could file. Not true.

The best bankruptcy someone can file is the one that best fits their facts and circumstances.

Some people make a the mistake of filing a Chapter 7 bankruptcy simply because they had heard it was the best that someone could file, and end up in federal court trying to undue the mistake. The best way to avoid filing the wrong bankruptcy is to speak with a Bankruptcy Attorney. There are many small details and nuances to the bankruptcy system and only a Bankruptcy Attorney can really say with any certainty whether someone should file a Chapter 7.

Chapter 7 bankruptcy generally involves the following basic steps:

1. Prepare and File a Voluntary Bankruptcy Petition, Schedules and other related documents.

1. This is how the Chapter 7 case starts. There are many different forms that need to be filled out in order to start and maintain a case for this type of bankrupcy. Chapter 7 forms are usually fairly simple (i.e., one form just asks you to write down your social security number) though some are so complex, even bankruptcy attorneys can take hours in filling them out.

2. A key element in filing for bankruptcy is that the person filing bankruptcy be totally honest when preparing all of their bankruptcy documents. There are steep penalties, including going to federal prison, for failure to be honest in your paperwork.

2. Complete an approved Credit Counseling Session.

1. Before anyone can file, they must complete and obtain a certificate from a court approved Credit Counseling Not-for-Profit Agency. There are a few circumstances under which a person would not have to satisfy this requirement - this is very rare. This requirement is typically done by virtue of a twenty five minute phone call.
   
2. For a complete list of court approved Credit Counseling Agencies follow this link: http://www.usdoj.gov/ust/eo/bapcpa/ccde/cc_approved.htm

3. Meet with the Chapter 7 Trustee
1. Whenever a Chapter 7 case is filed the Court will assign the case to a Chapter 7 Trustee. These trustees are usually accountants or lawyers. They are not judges. They do not decide whether your bankruptcy will be successful or not. In a nutshell, the trustee's job is to make sure the person who filed the bankruptcy filled out all the documents correctly, and to collect any property that belongs to the bankruptcy estate.

2. Upon filing the Chapter 7 case, the court will set a date and time when the Debtor will meet with their assigned trustee. At this mandatory meeting (sometimes called the "Meeting of Creditors" or the "Section 341 Meeting"), the Debtor and their attorney will meet with the Chapter 7 Trustee to go over the documents filed in their case. The point of this meeting is so the trustee can verify with the Debtor all of the information in the their documents. These meetings typically last anywhere from 5 to 10 minutes.

4. Complete an approved Debtor Education Course.

1. Before a Bankruptcy Debtor can recieve their Order of Discharge they must complete an approved Debtor Education course. This course can only be taken after the cae has been filed. Upon completing the course the Debtor will be given a Certificate of Completion. In a Chapter 7 bankruptcy the Debtor Education course must be completed and the Certificate of Completion filed with the Bankruptcy Court within the first two and half of the case. In a Chapter 13 case you have the entire term of the plan to complete the course and file the Certificate of Completion with the Court.
2. For a complete list of Approved Debtor Education providers click here: http://www.usdoj.gov/ust/eo/bapcpa/ccde/de_approved.htm

Generally speaking, so long as the above four basic requirements are satisfied by the Debtor, then the court will mail to the Debtor and his/her attorney an Order of Discharge. The Order of Discharge is the goal of any bankruptcy. It is the court order, signed by the Judge, that means theDebtor is no longer responsible for all the dischargeable debt listed in the bankruptcy paperwork.

Can I lose my house, my car, or any other personal belongings if I file Chapter 7 Bankruptcy?

The answer to this question has everything to do with where you live, which state's Chapter 7 bankruptcy law is going to apply (if any) and the value of the things that you own. It sounds a lot more complicated than it is.

Every state in the nation has laws that describe exactly what a person filing is allowed to keep out of the reach of the Bankruptcy Estate. These laws are known as Bankruptcy Exemptions. They use the word "exemptions" because the laws describe those items of personal property or land that are exempt from the process.

The bankruptcy exemption laws vary from state to state. Some states are very liberal while others are very limiting. For example, Florida laws say that a person filing chapter 7 bankruptcy can only own one car and that car can only have value up to $1,000.00. Where as New York laws allow a person to have a car worth p to $2,400.00.
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Aside from variation in amounts, like the car example above, the state bankruptcy exemption laws can vary quite a bit in their form. For example, the Missouri bankruptcy exemptions are very specific, they say exactly how much your wedding ring can be worth, how much your household furniture can be worth, how much your car can be worth, etc. WhereasTexas law is very general, the Texas bankruptcy exemptions simply say that a person filing bankruptcy can exempt up to $30,000.00 of any kind of personal property (cars, jewlery, baseball card collections, etc.).

Click here to research your own state's exemptions.

Can a Chapter 7 Discharge ever be denied?

Under certain circumstances, 11 U.S.C. § 727 provides that the Debtor's discharge may be denied in a chapter 7 case. Circumstances where a Debtor's discharge may be denied include where the Debtor:

• failed to keep or produce adequate books or financial records,
• failed to satisfactorily explain any loss of assets,
• committed a bankruptcy crime such as perjury,
• failed to obey a lawful order of the bankruptcy court, or
• fraudulently transferred, concealed, or destroyed property that would have become property of the estate.

For a complete list of grounds for denial of a discharge, contact a local bankruptcy attorney.