When you are preparing to file a Chapter 7 bankruptcy, your attorney will ask you if you paid any unsecured creditor more than $600.00 in the 90 days immediately preceding the filing or any family members any money in the last few years. These are considered preferential payments, that is you preferred to pay to debt over another. This is not always your fault. Often a creditor will tell you that “if you don’t make a payment today” the creditor will file an action in Court or attach your wages
After all of the required information has been collected, the petition papers completed and the Chapter 7 bankruptcy petition has been filed, a meeting with the assigned Trustee will occur. This is called the 341 meeting of creditors and will generally happen about 5 weeks after the petition is filed. It is called a meeting of creditors because the creditors can attend and ask questions. In fact, creditors hardly ever show up for the 341 meeting. The purpose of this meeting is for the Trustee to inquire of the debtor,
I often tell my clients that they will never meet the Bankruptcy Judge unless they do something very wrong. Generally, the Court will only be involved, directly, in more complicated matters than are likely to occur in Chapter 7 cases. Exceptions could include, refusing to answer questions or provide requested information to a Trustee; debtor (person filing) not appearing at 341 meeting; discovery of fraud by the debtor; motion to redeem collateral in a secured debt; or a motion to rescind discharge. In a Chapter 13, there are a lot
You may have heard the phase “Most people keep all of their belongings in Chapter 7 bankruptcy.” The reason for this is phrase is the bankruptcy laws provide a list of exemptions for many things which allow those things to be exempt from being lost in a bankruptcy filing. The reason is that a person filing a bankruptcy could not be expected to get a fresh financial start in life without any possessions. Once the exemption for an item is compared to the fair market value of the item, there
Often clients have struggled to pay their debts for a year or more before finally filing for bankruptcy protection. The stigma of bankruptcy and the hope of getting their finances straight just around the corner keep them from filing. But there is a cost to the waiting and it can be very expensive. Some of the actions taken that can end up being expensive are:
Taking money from retirement accounts, that would have been protected in a bankruptcy, to pay unsecured debts, that would have been discharged;
Borrowing money on credit card
As I outline information I need from my clients to file a bankruptcy petition, I often hear that they want to keep their home and vehicles so they don’t need to list them. The same thing happens with debts such as mortgages, car loans, certain credit cards, some doctors, taxes or student loans. The client’s financial history, things that happened in the past, must also be disclosed.
All assets and all debts must be listed in order to complete the case and obtain a discharge;
If the assets are listed, but not
11 USC 362 provides debtors (people filing a new bankruptcy) an automatic and immediate stay from any creditor trying to collect a debt once the bankruptcy case is filed. However, it is important to notify any creditors who are a party to a Court collection matter as soon as the bankruptcy is filed. I do that by faxing the creditor’s attorney notification including the filing receipt from the bankruptcy case. The creditor/attorney is responsible for doing whatever is necessary to stop collections.
Once the creditor has been made aware of the
Once you have decided that you need to file for bankruptcy protection, you need to decide how you are going to do this. The bankruptcy law allows you to prepare and file the petition on your own, use a petition preparer or hire an attorney. There are important considerations in deciding which to use. The preparation of the petition papers is extremely important and good advice throughout the process is necessary in order to have a successful bankruptcy.
You know better than anyone else whether you would be able to prepare
Chapter 7 bankruptcy is a total liquidation where you will eliminate all of your unsecured debt, i.e. debts where assets are not held as collateral while being able to continue to pay secured debts, i.e. debts where assets are held as collateral for the repayment of the debts. Chapter 13 is a repayment plan where your secured debts may be able to be restructured and a portion of your unsecured debt is repaid. Certain forms of debt cannot be discharged, including most taxes, student loans and child or spousal support.