Also known as “liquidation” or “absolute bankruptcy”, Chapter 7 bankruptcy carries with it an ominous portent to most. However, this plan can serve as a new beginning to those mired in debt without a light at the end of the tunnel. A Fort Wayne IN bankruptcy attorney can help you through this process.
Chapter 7 effectively relieves most debt. Unfortunately, it may also relieve you of most of your assets, at least those the court deems valuable. A Chapter 7 filing turns your financial world over to a trustee appointed by the bankruptcy court. This trustee assesses your financial situation, based on the information in your petition, and then moves to utilize assets to pay off your creditors or else determines you have no assets and qualifies these debts to be discharged.
Prior to the Bankruptcy and Consumer Protection reforms were signed into law in 2005, judges had the power to convert Chapter 13 filings into Chapter 7 filings at their discretion. Presently, however, debtors seeking relief from bankruptcy must first pass a “means test” that qualifies them for either Chapter 13 or Chapter 7 bankruptcy before they file.
After a debtor is approved to file Chapter 7 bankruptcy, they must successfully complete credit counseling with a government approved agency. A Fort Wayne bankruptcy attorney can give you a list of agencies certified for this purpose. The certificate you receive from this counseling must be given to the court along with your filing documents.
Your completed petition will be filed with the bankruptcy court by a Fort Wayne bankruptcy attorney. The Chapter 7 process normally takes between four and six months to complete. During this time, no property you own may be sold, given away or reassigned to another person and no debts can be paid off by you.
The court will schedule a creditor’s meeting at which your creditors have the option of appearing and questioning you under oath about your indebtedness. This is usually the only court appearance you are required to make.
After all feasible debts have been satisfied, the trustee will move to discharge all remaining debt. However, some debts are exempt from the bankruptcy process and may not be discharged. These may include student loans, alimony, child support, some taxes and any other debts the creditors have raised objections to.
After this point, the debtor cannot be held responsible for any debt discharged under the Chapter 7 plan. However, if there is any inheritance, insurance payoff or proceeds from a divorce settlement pending, you need to notify the court if they occur within 180 days after the date of your filing.
A Chapter 7 bankruptcy will remain on your credit record for 7 to 10 years and may affect your future ability to obtain credit, insurance and sometimes employment. Another Chapter 7 cannot be filed for 8 years.
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