bankruptcy discharge chapter 7

Chapter 7 bankruptcy is a liquidation proceeding. If you own some non-exempt assets, they’re sold by the Chapter 7 trustee and the proceeds are distributed to your creditors according to the priorities set up in the Bankruptcy Code. In nearly all consumer cases, all assets are exempt. There are, therefore, no assets to liquidate and no money to pay out to creditors. Chapter 7 is usually the most simplified and fastest form of bankruptcy. It’s available to individuals, married couples, corporations and partnerships.

Before you’ll be able to file Chapter 7 bankruptcy you’ll have to pass the “means test.” The means test is a calculation that compares your average income for the last six months, annualized, to the average income for families of the identical size in your state. If your income is less than or equal to the state average income, you “pass” the means test and may file Chapter 7 bankruptcy.

You Start by Filing a Chapter 7 Bankruptcy Petition

Your Chapter 7 bankruptcy is initiated by filing the official petition, schedules and statement of financial affairs. These forms require you to name all of your assets and all of your debts, along with some recent financial history. This is the most important and most time intensive part of a bankruptcy filing.

It’s important that you name each of your creditors with accurate mailing addresses. You must list each of your debts. You must even name those debts that are’t dischargeable and those you plan to reaffirm.

You must likewise name all of your property, along with any debts guaranteed by that property, and the sale value of the property. “Property” as defined by the Bankruptcy Code signifies “assets” or “possessions.” It’s not limited to only realty.

You must sign the schedules under penalty of perjury. You then file the schedules with the bankruptcy clerk in the district in which you live.

After you file your Chapter 7 bankruptcy petition, all the succeeding bankruptcy proceedings pertain to your situation as it existed on the date of filing.

The automatic stay moves into effect upon filing the petition. The automatic stay produces a legal barrier to collection activities by creditors. They can no longer contact you in an attempt to collect a debt.

The court then nominates a trustee and sends notice to all your creditors informing them that you’ve filed bankruptcy. You’ll receive a copy of that notice at the same time as your creditors.

First Meeting of Creditors

You must appear at a meeting of creditors. This is usually called the section 341 meeting. It takes its name from the section of the Bankruptcy Code that describes the meeting. At the meeting of creditors, the trustee will ask you questions about your assets and liabilities. Your answers are given under oath and carry the penalty of perjury. Creditors can likewise question you about those things, but they rarely do so.

After The First Meeting of Creditors

If you own any non-exempt assets, the trustee will take hold of them. The trustee will sell the non-exempt assets and apply the income to the expenses of administrating your case. He’ll also distribute any leftover funds to creditors with allowed claims. Each claim is assigned a priority according to the Bankruptcy Code. Those claims are paid in order of the priority of the claims.

The trustee may review your income and expense schedule to determine whether you have enough money left over after your actual living expenses to give something to creditors. Any money you make after the case is started is yours. It’s beyond the touch of creditors who have dischargeable debts on the date of filing.

Normally, the single duty you have after the 341 meeting is to cooperate with the trustee by furnishing whatever info he requests.

Getting A Discharge

The trustee and your creditors have a 60 day period following the 341 meeting during which they may dispute your right to a discharge in general or the dischargeability of a specified debt. Unless a request to refuse your discharge is filed, the order giving the discharge of debts is issued by the court soon after the 60 day period of time passes. If one creditor files a challenge to your discharge it doesn’t preclude or delay the entering of a discharge of the rest of your debts.

As a precondition to your discharge, you must finish a financial training course from an authorized provider. The class usually lasts for several hours. Many approved providers have online classes available. Your failure to take the course and file a certificate of completion of the class may result in your case being closed without the entering of a discharge order. The court can charge you another filing fee to reopen the case, file the certificate and enter the discharge.

You can ordinarily expect your discharge inside 4-6 months of filing your case. The discharge involves dischargeable debts that existed at the outset of your case.

Some debts do survive a Chapter 7 bankruptcy discharge. They’re excluded from the discharge by law. Those specific debts are taxes, child support, student loans, and liens. If you reaffirm any debts they likewise come through the bankruptcy discharge.

Harvey L. Cox is a an attorney and certified mediator in Texas. For more information on bankruptcy issues, visit The Bankruptcy Law Blog (http://Bankruptcy.NoLegalesePublishing.com).

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