Although most people are familiar with the term bankruptcy, they may be unfamiliar with the different types of bankruptcy. Of the two types of personal bankruptcy, chapter 7 is generally the more frequently used today. Chapter 7 bankruptcy has some distinct advantages for the person who has to file for personal bankruptcy and many may consider it preferable to chapter 13 bankruptcy. However, this all depends upon individual situations. In this article we are going to cover all the essential information that a person who is considering chapter 7 bankruptcy may want to know.
What Does “Chapter 7″ Mean?
Chapter 7 is actually an abbreviation for the name of the law that governs bankruptcies: The Bankruptcy Code is part of the US Federal Bankruptcy laws, and chapter 7 is the specific portion of that code that describes this particular type of bankruptcy.
Who Can File Chapter 7 Bankruptcy?
Persons who have a monthly income that is less than the median income in their state of residence can normally qualify to file chapter 7 bankruptcy. This median income will be different in every state.
Special Requirements For Filing Chapter 7 Bankruptcy
To file chapter 7 bankruptcy, you are required to attend credit counseling. This must be done 180 days prior to the bankruptcy filing itself.
Filing The Chapter 7 Bankruptcy Petition and Providing Statements
Most people who file chapter 7 bankruptcy find that it is essential to have an experienced bankruptcy attorney to handle the filing process for them. This can be a lengthy process which must begin with the filing of the petition for bankruptcy in the bankruptcy court. The court will require a list of assets, liabilities, information about your income, your expenses, and an official statement of your financial position. You will be required to provide a copy of your last tax return as well. All of this information will be handed over to the bankruptcy trustee who is assigned to your specific case. The trustee will request additional information as needed, such as proof of expenses that were previously undocumented.
The Filing Charges
Filing charges must be paid at the time you or your attorney files the petition for bankruptcy, in addition to an administrative fee and a surcharge which goes to the trustee of your bankruptcy case.
Meeting of Creditors
Once the petition for bankruptcy is filed, a “Meeting of Creditors” must be held in the next month. The person who is filing bankruptcy will be placed under oath and must answer inquiries from the trustee and the creditor or creditors involved in the bankruptcy. The purpose of this meeting is to help the trustee determine if the bankruptcy could be a case of bankruptcy abuse.
Liquidation of Property
Although chapter 7 does discharge nearly all debt, rendering the person filing the bankruptcy debt-free, the debtor must lose property to do this in certain cases. This property will be sold to help pay off the debt that is not exempt. Some property such as a home and a vehicle may be protected while other property may not. The trustee will be in charge of liquidating the property and deciding how to allocate any proceeds to the creditors.
If you find yourself in dire financial straights and don’t know where to turn, call us at (813) 200-4133 Tampa Bay Bankruptcy Center, 15421 N. Florida Ave., Ste. B, Tampa, FL 33613