Chapter 7 bankruptcy, also known as a liquidation bankruptcy, gives a debtor a fresh start in life. Once the bankruptcy process is complete, the debtor has absolutely no liability for discharged debts. This gives honest people a clean slate, and a second chance to start over.
Chapter 7 bankruptcy allows you to keep certain property.
Many people believe that if you go through a bankruptcy, you cannot keep any of your assets. This is simply not true. In a Chapter 7 bankruptcy, a trustee is appointed to gather and sell, or liquidate, all of the debtor's "non-exempt" assets. The trustee will then pay creditors with the proceeds pursuant to the bankruptcy code. However, Chapter 7 bankruptcy also allows the debtor to keep certain property, called "exempt" property. Exempt property may include items such as household furnishings and household goods, appliances, animals, certain electronic items (such as a computer and a television), and specific types of jewelry, as well as certain retirement funds. Debtor's may also choose to redeem, or buy back, certain assets that do not qualify as exempt.
Chapter 7 ends creditor action and harassment.
Filing a Chapter 7 bankruptcy petition also puts an immediate stop to foreclosure proceedings, garnishments, harassment by creditors, and repossession actions. Once you file, a creditor is prohibited by federal law from taking any action to collect money or property, such as cars and homes, from the debtor. This is called an automatic stay. In order for a creditor to resume any action against a creditor, specific permission to proceed must be obtained from the Court, which is only granted in very limited circumstances.
Chapter 7 bankruptcy process.
The Chapter 7 bankruptcy process starts by filing a Petition complete with all schedules of assets, liabilities, income, and all other required documents with the Court. Next, a trustee is appointed to review your Petition, and gather all non-exempt property from the debtor for liquidation.
Approximately 4-6 weeks later, the trustee will schedule a meeting of creditors. This is a mandatory meeting for any debtor seeking a Chapter 7 bankruptcy. At this meeting, the debtor will be put under oath and both the trustee and creditors may ask the debtor questions about his or her financial affairs and property. The trustee may also request additional information or documents.
If the trustee is satisfied with your testimony and documents, and there are no objections to the discharge filed by your creditors, the bankruptcy court will generally issue a debt discharge order about 60-90 days after the date set for the first meeting of creditors.
To schedule a free, confidential consultation, contact Attorney Kimberly M. Glencer at 301-220-2288.
