Bankruptcy is not a word that most people like to ponder, and it is rarely discussed as an option unless all other efforts have failed. That said; it is nice to know that Chapter 7 bankruptcy is available in the event that it is necessary. By the time one reaches the point of needing a bankruptcy attorney, it’s possible that he or she might have learned how the process works and what happens to property and debts after it is completed.
If you aren’t sure whether Chapter 7 bankruptcy is the best option for you, read on; this type of bankruptcy is also known as “straight” bankruptcy or “liquidation. The entire process takes less than six months and costs approximately $300 in administrative fees; however you must first complete credit counseling with an approved agency of the United States Trustee. This requirement can be found on the Trustee’s website (www.usdoj.gov/ust) under the heading of “Credit Counseling and Debtor Education.”
Can you file for Chapter 7 bankruptcy?
A bankruptcy attorney can help you determine if this is the right type of bankruptcy for your situation, but you will not be allowed to file for Chapter 7 if you have already had a bankruptcy discharge in the past six to eight years. Also, if the bankruptcy court finds that you could feasibly complete a Chapter 13 bankruptcy, or repayment plan, you will not meet the eligibility requirements for Chapter 7. This can be determined by taking the Chapter 7 Eligibility and Means Test. If you are eligible, your bankruptcy attorney will help you fill out the proper forms and submit them to your local bankruptcy court. Here, you will be asked to describe your debts, your property and your current income and living expenses.
Will I lose everything in a Chapter 7 bankruptcy?
Most states will allow you to keep some of the equity in your home, as well as household furnishings, clothing, a vehicle and the necessary tools of your trade. However, you must provide the court with information about the property you sold or gave away over the past two years as well as any property ownership or expenditures during that time.
What happens next is that the “automatic stay” or “Order for Relief” that immediately puts a stop to any creditors who are trying to collect the money you owe them. At least temporarily, these creditors can no longer garnish wages or go after your car, home or other property. Utility companies cannot shut off your service either, but as your bankruptcy attorney will explain, the court will now have control over your financial affairs. During this time you will not be allowed to give away or sell anything, nor will you be allowed to pay off any pre-filing debts without the consent of the court.
Without a bankruptcy attorney helping you through this, Chapter 7 bankruptcy can be overwhelming. If you are considering a straight bankruptcy or a Chapter 13 repayment plan, consult with an experienced bankruptcy attorney in Colorado Springs.