A Chapter 7 Bankruptcy Overview
Chapter 7 bankruptcy is usually referred to as "liquidation" bankruptcy. This is because it cancels your debts, but you might have to let the bankruptcy court sell some of your property for the benefit of your creditors. This particular chapter refers to that particular chapter of the federal Bankruptcy Code.
Chapter 7 Bankruptcy Time and Procedure
The process for a Chapter 7 bankruptcy with Esquire Law Center from the time documents are submitted and all fees are paid in full is usually no more than a week. At most time, you could expect to have your case complete within a couple business days. We want to make sure that we don't lag with any particular case and that you receive your "fresh start" as soon as possible. Client cooperation and communication is also paramount in how fast a Chapter 7 case may be completed.
You will also need to take an approved credit counseling class. However, Esquire Law Center has partnered with an online credit counseling agency to ensure a speedy process with this hurdle and to allow every client to take this class in the comfort of their home.
Once this is done and the case is filed, the 341(a) (creditor) hearing date is usually a month away from the time of filing. An attorney who has thoroughly reviewed your case will go with you to the 341(a) hearing. At this hearing, the trustee has the right and duty to ask you certain questions regarding your petition and circumstance surrounding the bankruptcy filing. For the most part, this part is painless especially since your case will be polished. Most of our hearings do not last more than 2 minutes.
Who Can File
A person may file a Chapter 7 bankruptcy if it has been more than 8 years since their last Chapter 7 filing or 6 years since their Chapter 13 filing. Furthermore, to file one must either pass the means test or be under the state median income.
The state median income is the gross amount of income allowed for residents of California depending on the number of people in your household. If you are under a certain amount, you are automatically allowed to file for a Chapter 7. If not, one may still pass the means test in order to file. The means test takes into consideration a person or family's mortgage, certain medical expenses, court–ordered payments including child support and alimony, and other necessary expenses for living. However, the vast majority of everyday expenses are IRS allotted expenses.
Bankruptcy Forms and Documents
Various bankruptcy forms within the bankruptcy petition include and are not limited to schedules, statement of intentions, paystubs, and tax returns.
The Automatic Stay
When someone files for Chapter 7, the "automatic stay" affords the filer to have a pause from creditor collection and communication. If someone wishes to bypass the automatic stay, one must first file a motion for relief from automatic stay. This is typically a frequent nuisance for creditors since they now know they cannot harass you. Furthermore, Esquire Law Center pursues these violations which happen more frequently than one would think.
Also, the automatic stay can be used to postpone a sale date on a home affording people to stay in their home a little bit longer. Many times, people are able to stay in their homes for months at a time.
The Bankruptcy Trustee for Chapter 7 Bankruptcy
At the 341(a) hearing, you will be examined by the Chapter 7 trustee. The trustee is not a judge, but rather a court appointed official who has the duty to examine your assets to see if there is anything to liquidate for the benefit of your creditors. This is why careful Chapter 7 planning is essential to your case.
The trustee also examines paystubs and requires the most recently filed tax returns. Tax returns are mailed once the bankruptcy petition is filed and a trustee is assigned. All tax returns must be submitted with REDACTED social security numbers. This is a common mistake for most attorneys.
The Creditors Meeting
The 341(a) (creditor) hearing or meeting will usually be the only meeting most bankruptcy filers will attend. Some typical questions the trustee may ask include and are not limited to:
- Are there any omissions or errors in your bankruptcy petition?
- Did you personally sign your bankruptcy petition?
- Have you transferred or sold any assets in the last 2 years?
- Is this a true and accurate copy of your tax return?
Some of these questions vary from trustee to trustee. It is a good to have an attorney who knows the nuances of many of the questions the trustee may ask. Also, you want to be prepared to answer these questions calmly and truthfully. Ideally, all of this would be properly squared away with proper filing and bankruptcy planning.
The Chapter 7 Bankruptcy Discharge
Once the bankruptcy process is complete, you receive what is known as a "discharge". This is the beginning of your "fresh start". However, there are at many times, gross violations in your credit report that could hinder your life after bankruptcy. Do not fret. Esquire Law Center stands by all their clients as family members and will assist you and coach you for life after bankruptcy. We want to make not only the process as painless as possible, but the post–bankruptcy process as well.