Chapter 7 Bankruptcy Will Give You a Fresh Start

Written by Adam Peck Category: Nursing Homes January 23rd, 2013 3 min read

A Chapter 7 bankruptcy usually requires selling almost all of your non-exempt property, a process called liquidation. The money from this sale is then used to pay down your debts as far as possible.

This process, along with various other requirements, lasts an average of four months from the date you file bankruptcy. Once you have completed all the steps, your debts are discharged, which means you no longer owe the creditors. The bankruptcy prohibits them from seeking further payment says Los Angeles Bankruptcy Attorney Steven C. Peck.

Depending on your state, you may not have to sell certain property as part of the liquidation. Such property falls under what is known as an “exemption” to usual sale requirements. Sometimes in Chapter 7 cases there aren’t any assets available to satisfy any portion of the creditors’ unsecured claims, and that’s called a no-asset case.

Do You Qualify for Chapter 7?
Not everyone is eligible to file Chapter 7 bankruptcy. In 2005, the bankruptcy code was amended to require a “means test” to determine whether you qualify.

The means test is a comparison of your income to median income figures produced by the IRS and the Census Bureau. To conduct the test, you fill out Form 22A, which consists of entering your personal data, along with the relevant median income information from here.

If the means test determines that your resources are too high, then you will probably have to file a Chapter 13 bankruptcy.

The Chapter 7 Process
After you have had the required counseling session, you can begin the bankruptcy process if you file a petition in the proper court within 180 days. Each state has at least one bankruptcy court.

The court provides the petition, along with other official bankruptcy forms and instructions.

In the petition, you’ll list a complete description of all property and debts, along with several other pieces of documentation and information. Here is a checklist of the various forms and information you will need to provide for Chapter 7.

The bankruptcy court will charge you $299 when you file – a filing fee of $245, an administrative fee of $39 and a trustee fee of $15, but you can apply to have them waived or paid in installments. Once you file, creditor phone calls and letters should stop.

The court will also appoint a trustee who manages your case and controls the sale of any eligible assets in order to pay your creditors.

About three to five weeks after you file, the trustee will conduct a meeting with your creditors that’s called a 341 meeting, named after the section of bankruptcy code that requires it.

Creditor meetings are typically not adversarial. The trustee will confirm the facts that you submitted in your bankruptcy petition; you won’t have to argue your case for bankruptcy or justify your filing. The trustee will ask you questions while you’re under oath. Any of your creditors who choose to attend may also ask you questions, but creditors in most straightforward cases seldom do.

If your case goes smoothly, you will be granted a discharge from your debts, which means you will no longer have to pay them, and your creditors can no longer pursue payment from you.

Note that not all Chapter 7 cases end in discharge, and so it’s important to talk about your circumstances with a knowledgeable attorney prior to starting your case.

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Written by Adam Peck

Expertise: Personal Injury

Adam J. Peck, ESQ is a principal with Peck Law Group, APC. In 2008, Mr. Adam Peck received his Juris Doctorate from Whittier Law School where he graduated Cum Laude. His practice is primarily dedicated to representing Elders, Dependent Adults, along with their loved ones and family members, who have suffered horrific personal injuries.