What is Chapter 7 Bankruptcy?

In chapter 7 bankruptcy the automatic stay prevents any lawsuit and any action on your property. The trustee will then sell your property to settle your debts. This article describes chapter 7 bankruptcy, its rules, and who is eligible for relief under the bankruptcy code.

Cost and Requirements

You’ll need to pay to cater for the filing and administrative process. You should expect the process to take between four to six months. During this time, you’ll be required to fill forms and provide information regarding your schedules and financial statements.

Before the court can accept your petition, you need to go for credit counseling from an agency that is recognized by the United States. This can be done online or over the phone.

Chapter 7 Eligibility

This is the fastest and simplest bankruptcy applications and is available to individuals, corporations, partnerships, and any other business entity. However, you cannot file for bankruptcy under chapter 7 if you got a bankruptcy discharge within the last eight years.

The court may decide that you can pay your debts under a chapter 13 repayment plan. The chapter 13 plan allows debtors to pay their debt through an adjusted repayment plan and thereby may avoid losing their property.

High earning individuals whose debt is primarily consumer debt may not qualify for chapter 7 relief. You may be required to take the mean tests if your consumer debt is more than 50% of all your debts. If your income is above the median income for households of the same size in your state, you may not be qualified to file for bankruptcy under chapter 7.

Forms You Need

There are a number of different forms you’ll be required to fill depending on your particular case. You can get the forms online from the U.S. Courts official website. A chapter 7 bankruptcy attorney in Akron can help walk you through the process. These forms seek to describe the following:

• Your Property: You may be required to fill forms giving an outline of all your assets, liabilities, and any other required information related to your assets.
• Exempt Property: Depending on the state you are in, the courts may allow you to keep some of your property. This may include social security payments yet to be spent, household furniture, and your tools of the trade.
• The state of your current income and your expenses.
• Means test calculation: If your income is above the state median income you’ll be required to fill the means test calculation form.
• Debts: You’ll be required to give information about your debts and creditors.

Creditors First Meeting

Within two weeks after filing for chapter 7 bankruptcy, the first meeting of creditors, also referred to as the 341 meeting, will be scheduled. At this meeting, the trustee will ask you questions about your debts and other aspects of your application. You need to note that you’ll be answering questions under oath. For most people, this is the only appearance they need to make before a court of law especially if they have a chapter 7 bankruptcy attorney in Akron.

The trustee may continue the meeting if he needs more information from you.  The trustee’s job is also to determine if you have any assets that are not exempt and may be administered for the benefit of your creditors.

Discharge

Discharge is a legal term that means you are no longer legally obligated on your debts.  Not all debts are dischargeable.  You need to discuss what is dischargeable with a local chapter 7 Bankruptcy Attorney. You need to complete a financial management course to receive a discharge.  This can be completed online.

If you're filing for chapter 7 bankruptcy, look to a leading bankruptcy attorney in Akron.