If you are wondering how to start the process of filing for Chapter 7 bankruptcy, then this article is for you. Filing for bankruptcy can seem like a daunting process, especially for individuals who are in the beginning stages. But, with preparation and assistance from a bankruptcy attorney, you can feel at peace that you have a legal professional to help ward off unexpected surprises. In general, the process of Chapter 7 will last around 3-6 months. This is actually a much faster process compared to other bankruptcy chapters, where a debtor has to organize their debts for repayment.
Below, we have answered common questions that people have when filing for Chapter 7 bankruptcy:
What are the prerequisites to filing for Chapter 7 bankruptcy?
The first phase of any chapter for bankruptcy is to organize your financial records. You will have to gather relevant information such as records of your debts and assets, in order to submit a petition. Your attorney can help you with this step. If you are a person with a minimum of 50% consumer debt, you will have to complete a course for credit counseling from an agency that is government-approved. Debtors who have debts primarily related to their business will not have to get counseling.
When will the collection efforts halt?
After submitting your bankruptcy petition, an “automatic stay” will be placed on your file. This means that credit agencies are no longer permitted to contact you in order to get money. Then, the court takes over and you must relinquish control over your debts and property to the bankruptcy court. A bankruptcy trustee will be appointed to handle your case. Their duties include reviewing your disclosures for bankruptcy, obtaining financial documents, meeting with creditors, liquidating nonexempt assets, and distributing proceeds to creditors.
What will a “meeting of creditors” entail?
A meeting of creditors (or also called a 341 hearing), is when you answer questions under oath posed by creditors about your finances and bankruptcy petition. If you do not attend or lie while under oath, your case will be immediately dismissed and no amount of your debts will be discharged. Your attorney can help you prepare for a meeting of the creditors by rehearsing answering example questions in their law office. Your creditors will then have 60 days to submit a response with challenges. If your creditors have more questions or any necessary documents are missing, a second meeting of the creditors may be scheduled.
When will my debts be discharged under Chapter 7 bankruptcy?
Between 60 and 90 days after the initial meeting with the creditors, a judge will order a debt discharge. You will receive a notice, along with your creditors, unless another party files a complaint that objects to the discharge. In most cases, it is another creditor who files a complaint and your attorney can defend you against the objections. If not, then qualifying debts will be discharged and you will begin a new financial path in restoring your credit over the long-term. A bankruptcy status will appear on your credit report for around 10 years.
To hear more about how a bankruptcy lawyer can help you with filing for Chapter 7 bankruptcy, call a reputable bankruptcy lawyer, such as from Marty Martin Law, to schedule a consultation.