Filing For Chapter 7 Bankruptcy?
Some people are reluctant to consider filing for bankruptcy because they worry that it comes with a stigma. But the truth is that bankruptcy is an opportunity to take control of your finances and make a fresh start by restructuring your debt. Chapter 7 is an especially useful tool to rebuild your credit, since it’s designed for people who are burdened primarily with consumer debt.
In a Chapter 7 petition, you disclose all your assets, debts, income and expenses to the court. The court applies certain exemptions to your assets. If you have assets that exceed the allowed exemptions, those are turned over to the court and paid on a pro rata basis to your unsecured creditors. (In many cases, once the exemptions are applied, no assets remain for payment to unsecured creditors.)
At the end of the proceeding, the court issues an order of discharge, and you are no longer liable for applicable debts.
The Chapter 7 Process
During prepetition, you must gather all relevant information to prepare the petition. This includes information regarding all your assets, debts, income and expenses. You must also determine in some cases how you would like the exemptions applied.
Exemptions are statutory rules that dictate what property you may keep during the bankruptcy process. Exempt property may not be applied to your outstanding debt. Each state has its own exemptions, and there are federal exemptions. You must choose one set of exemptions or the other. Some states require that you use state exemptions. Some states allow you to use the federal exemptions. You must also take prepetition consumer credit counseling. This is required within 180 days prior to filing the petition.
Filing The Petition
Immediately upon filing your petition, a 120-day stay goes into effect. Under the 120-day stay, all creditors must cease any efforts to collect on debts that you owe. If you are contacted by a creditor after filing, you should tell the creditor you’ve filed a petition for Chapter 7 bankruptcy and give them the case number.
The 341 Meeting
Once your petition has been filed, the court will also set a date for the meeting of creditors. The meeting of creditors (sometimes called a “341 meeting”) is a public meeting held between you and the Chapter 7 trustee. The purpose of the meeting is to give both the trustee and your creditors an opportunity to question you under oath. You will be sworn in, and the Chapter 7 trustee will ask you questions regarding your petition and its contents. Any creditors who are present will then be given an opportunity to question you. As a general rule, creditors are not present at this meeting; however, they do show up from time to time.
Your creditors have a period of time after the 341 meeting to file objections to your petition, but objections available to creditors are limited.
The Goal Is Discharge Of Your Debts
After your meeting of creditors, you are required to complete postpetition credit counseling. Often, this is available from the same organization that provided your prepetition counseling. The court will not grant a discharge and may actually dismiss your Chapter 7 petition if you do not complete your postpetition counseling in a timely manner.
So long as the trustee has no further questions regarding your petition and after the creditors’ time for objections has run out, if everything has proceeded smoothly, the court will grant a discharge of your debts.
Contact Me For Help
There are many points along the way when a bankruptcy attorney can assist you in making sure the Chapter 7 process runs smoothly. From working with you to determine whether you qualify for Chapter 7 to assisting you in determining which exemptions to use in preparation for your 341 meeting, a bankruptcy lawyer can help make sure your Chapter 7 petition moves smoothly through the court, setting you on the path to a fresh start and freedom from debt.
Contact The Law Office of Amy K. Butler, Esquire, PLLC today for a consultation on Chapter 7 bankruptcy. I serve all towns in Montpelier and throughout Vermont.
This is a debt relief agency. I help people file for bankruptcy relief under the Bankruptcy Code.