Who can be a Debtor in Chapter 7?
To qualify to file a Chapter 7 you must be an individual, a partnership, or a corporation.
An individual cannot file a Chapter 7 if during the preceding 180 days a prior bankruptcy petition was dismissed due to the your willful failure to appear before the court or comply with orders of the court, or you voluntarily dismissed a previous case after a creditor sought relief from the court to recover property upon which it held a lien.
In addition, you cannot file Chapter 7 until you have received credit counseling from an approved credit counseling agency.
It is not a difficult thing to accomplish but it is very important that it is completed before your case is filed.
The course cannot be completed more than 180 days before you file or you must take it over.
Property Received After Filing In a Chapter 7
As a general rule, assets acquired after you file your file your case are yours and not involved with the case. There are, however, a number of exceptions.
They are: the right to receive an inheritance, the right to receive a property settlement or money under a life insurance policy or the right to receive money under a death benefit plan.
If you are "entitled" to received these types of assets within 6 month of your filing (even if you do not physically receive them during this time) you may have to turn them over to the trustee.
If you think this might happen during your case be sure to discuss this with me. If this occurs unexpectedly after the case is filed you are under a duty to disclose this information to the trustee.
Automatic Stay In a Chapter 7
Once you file your case an "automatically stays" (stops) most collection actions against you and your property, including actions to foreclose on your house, repossess an automobile or garnishments. There are a few exception to the stay, such as some child support and landlord/tenant issues.
Meeting of Creditors In a Chapter 7
Between 20 and 40 days after your case is filed, there will be a "Meeting of Creditors". (Sometimes known as a 341 Meeting.) The Court location for the 341 Meeting will depend on your residence. During this meeting, (which you must attend) The trustee assigned to your case puts you under oath, and both the trustee and any creditors who might be present have the opportunity to ask questions.
In some limited circumstances, attendance at the Meeting of Creditors can be waived by the Court.
In most cases very few questions are asked.
The Bankruptcy Judge is not present during this meeting.
In the vast majority of cases no creditors appear and the whole process takes 15 minutes. Having said that, many cases are scheduled at the same time so we might have to wait perhaps 45-60 minutes to have your case called. It is imperative that you are on time for this Meeting.
If your case is called and you are not there it will be put on the end of the docket or the Trustee will seek to have your case dismissed.
The Chapter 7 Discharge
A discharge releases you from personal liability for most debts and prevents creditors from taking any collection actions against you. In most cases this is granted about 4 months after you file your case.
The discharge granted in a Chapter 13 case is broader than a Chapter 7 Discharge which is why some people file Chapter 13. If you would be better served by filing a Chapter 13 I will advise you of that fact when I know more about your situation.
You can denied a Discharge by the Bankruptcy Judge under limited circumstances. The court may deny you a discharge if it finds that you:
1) failed to keep or produce adequate books or financial records; failed to explain satisfactorily any loss of assets;
2)committed a bankruptcy crime such as perjury;
3)failed to obey a lawful order of the bankruptcy court;
4) fraudulently transferred, concealed, or destroyed property that would have become property of the estate; or
5) failed to complete an approved instructional course concerning financial management.
Revocation of Discharge In Chapter 7 Cases
The court may revoke your discharge if the discharge was obtained through fraud by you, if you acquired property that is property of the estate and knowingly and fraudulently failed to report the acquisition of such property or to surrender the property to the Trustee, or if you (without a satisfactory explanation) make a material misstatement or fail to provide documents or other information in connection with an audit of your case.
Filing Fee for Chapter 7
The filing fee is $335.00.
It is possible to pay it in installments but at least $100.00 must be paid when the Petition is filed. Failure to pay the fee will result in dismissal of the case by the Court.
Reaffirmation Agreements In Chapter 7
Secured creditors may retain some rights to your property even after a discharge is granted. Depending on the circumstances, you may wish to keep certain secured property (such as an automobile), by deciding to "reaffirm" the debt.
A reaffirmation is an agreement between you and your creditor that you will remain liable and will pay all or a portion of the money owed, even though the debt would otherwise be discharged in your case.
In return, the creditor promises that it will not repossess or take back the automobile or other property so long as you continue to make your payments.
If you wish to reaffirm a debt, you must do so before the discharge is entered.
You must sign a written reaffirmation agreement and file it with the court. The Bankruptcy Code requires that reaffirmation agreements contain an extensive set of disclosures.
Among other things, the disclosures must advise you of the amount of the debt being reaffirmed and how it is calculated and that reaffirmation means that the you remain personal liability for that debt and it willnot be discharged in your bankruptcy.
The law also requires that you sign and file a statement of your current income and expenses which shows that you can afford to pay the debt.
If I represent you in connection with the reaffirmation agreement, I will certify in writing that I have advised you of the legal effect and consequences of the agreement, including a default under the agreement. I will also certify that you were fully informed and voluntarily made the agreement and that reaffirmation ofthe debt will not create an undue hardship for you or the your dependents.
Exempt property in Chapter 7
The Bankruptcy Law allows you to protect some property from the claims of creditors because it is exempt under federal bankruptcy law or under the state law. This is why most people who file Chapter 7 do not loose any of their property. Every situation is different but I can give you my opinion on your situation once I know more of the facts of your case.
Very Important. The Means Test.
To qualify for a Chapter 7 case your income must be below a certain level or you must pass what is called the "Means Test" unless you are exempted from it.
Certain military and other persons are exempt from taking the Means Test.
It basically is a formula in the bankruptcy law which calculates out your income and expenses and determines out much is left over. Too much and you do not qualify to file a Chapter 7. Another option: file a Chapter 13.
The figures used in the Means Test change a few times a year so if you did not qualify before that does not mean you will not qualify now.
I need to know a good deal about your finances for me to tell you if you qualify to file a Chapter 7. The beginning point is to determine how much money you have received from all sources for the last 6 months.
Non-dischargeable Debts In Chapter 7
Not all of your debts are discharged in Chapter 7.
Debts not discharged include debts for alimony and child support, certain taxes, debts to governmental units for fines and penalties, debts for certain educational benefit overpayments or loans made or guaranteed by a governmental unit, debts for willful and malicious injury by the debtor to another entity or to the property of another entity, debts for death or personal injury caused by your operation of a motor vehicle while you were intoxicated from alcohol or other substances, debts owed to certain tax advantaged retirement plans, debts for certain condominium or cooperative housing fees, and, finally, debts for certain criminal restitution order. These debts are automatically discharged.
Debts for money or property obtained by false pretenses, debts for fraud or defalcation while acting in a fiduciary capacity, and debts for willful and malicious injury by you to another entity or to the property of another entity will not be discharged if a creditor timely files and prevails in a lawsuit before the bankruptcy judge to have such debts declared non-dischargeable.
The Discharge given in a chapter 13 is broader which is why sometimes filing a chapter 13 is preferred.
Very Important. If you think that you have any of these nondischargeable debts be sure to tell me fully about them so that I can advise you how best to proceed.