What to Know about Filing Chapter 7 Bankruptcy

            Chapter 7 bankruptcy, the most common type of bankruptcy filing, is a liquidation for a person or business. The petition (bankruptcy) filing asks the bankruptcy court to grant the debtor (person filing the bankruptcy) a discharge. The discharge is a permanent injunction that prevents the creditors who are listed and noticed of the bankruptcy from ever collecting on the debt owed. This discharge is only available for individuals and not companies or businesses who complete the bankruptcy process.

 Asset and No Asset Cases

            There are two types of cases, no asset and asset cases. No asset cases mean that the property that the debtor owns are completely protected by exemptions and is not available to the trustee or creditors. In an asset case, the real (land, condo, house, timeshare) or personal property of value debtor that exceeds the available exemptions will be sold by the trustee and the money will be used to pay creditors.

 Important things to know when considering a Chapter 7 Bankruptcy:

1. 1. If you do not list a debt, then it will not be discharged.
   2. If you hide property, falsify records, lie, or disobey a court order, then the judge may deny your discharge.
   3. You are only eligible for a chapter 7 discharge every 8 years (dates go from date of filing to date of filing).
   4. Secured claims (such as mortgages on homes and liens on cars) will remain attached to the collateral even if you get a discharge. So, if you do not pay, then the creditor may file a foreclosure or repossess the vehicle.
   5. Student loans, criminal restitution, alimony, child support, and most taxes are not dischargeable.
   6. There are two different trustees: United States Trustee and the appointed Chapter 7 Trustee. Disclosing income is important since the means test determines whether you qualify to be in Chapter 7 versus Chapter 13. The United States Trustee will be looking to verify you are in the right chapter.
   7. The Chapter 7 Trustee is not a judge. The Chapter 7 Trustee represents the interest of the creditors and may ask for money or property that they may not be able to take if you have an attorney protecting you. If there is a dispute with the trustee, the judge is the one who decides who is right.
   8. Having an experienced bankruptcy attorney to guide you through the process successfully can help ensure you can keep the maximum amount of your money, property, and possessions through exemption planning and give you peace of mind that you have an advocate on your side.

Disclaimer: The information in this blog post (“post”) is provided for general informational purposes only and may not reflect the current law in your jurisdiction or the jurisdiction applicable to your issue/matter. No information contained in this post should be construed as legal advice from Roberts Law, PLLC or the individual author, nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting on the basis of any information included in, or accessible through, this Post without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s state, country or other appropriate licensing jurisdiction.