Chapter 7 is sometimes called a “straight” bankruptcy. It is used to wipe out unsecured debts like credit cards, medical debt, repossessions, and tax debt that is over three years old without any payment. In most cases, you do not lose your personal possessions, and usually continue to pay for your house, cars or furniture.
Chapter 7 Bankruptcy Timeline
Chapter 7 is generally a much quicker process than filing chapter 13. A typical chapter 7 case will last about 6 months from the date of filing. In some cases if there are assets to sell a case take take much longer. Before a client can file a chapter 7 case they must complete a credit counseling course. A client must also pay a filing fee of $335 to file a chapter 7 case.
After the case is filed the “automatic stay” goes into effect. The automatic stay gives instant relief to a debtor who is being harassed, garnished, foreclosed, or being sued by a creditor. The automatic stay immediately stops all collection activity from the creditors. So, at least temporarily, creditors cannot garnish your wages, empty your bank account, go after your car, house, or other property, or cut off your utility service.
Bankruptcy Court’s Control Over Your Financial Affairs
Once a debtor files chapter 7 bankruptcy the court will control your property owned and determine which if any assets can be sold to pay some or all of the creditors. You can’t sell or give away any of the property you own when you file, or pay off your pre-filing debts, without the court’s consent.
The Bankruptcy Trustee for Chapter 7 Bankruptcy
The court will put a trustee in charge of the estate of the debtor after the petition is filed. The trustee’s primary duty is to see that your creditors are paid as much as possible of what you owe them.
The trustee will examine the petition to make sure they are complete and to look for nonexempt property to sell for the benefit of creditors. The trustee will also look at your financial transactions during the previous year to see if any money should be returned and distributed to your creditors. A debtor must use caution when filing a chapter 7 to ensure all assets are protected and not sold.
The 341 Creditors Meeting
About 30 days after you file, you must attend the 341 meeting of the creditors. The bankruptcy trustee runs the meeting and, after swearing you in, he will go over some of the details of your petition, and your creditors will also have a chance to ask questions in the meeting.
What Happens to Your Nonexempt Property
If the trustee determines that you have some nonexempt property, you may be required to either surrender that property or provide the trustee with its equivalent value in cash. However, which property is exempt varies by state. That’s why it’s important you contact a bankruptcy attorney in your state to review your state’s exemptions.
How Your Secured Debts Are Treated
If you have used property as collateral for a loan, the loan is called a secured debt. The most common examples of collateral are houses and automobiles. If you’re behind on your payments, the creditor can ask to have the automatic stay lifted in order to repossess or foreclose on the property. If you are current on your payments, you can keep the property and keep making payments as before — unless you have enough equity in the property to justify its sale by the trustee.
The Chapter 7 Bankruptcy Discharge
At the end of the bankruptcy process, all of your debts are wiped out (discharged) by the court, except: debts that automatically survive bankruptcy, such as child support, most tax debts, and student loans, unless the court rules otherwise, and debts that the court has declared nondischargeable because the creditor objected (for example, debts incurred by your fraud or malicious acts).
Bankruptcy laws vary from state to state. Get the assistance from a bankruptcy attorney experienced with the laws in Georgia. Call us at the Law Office of Michael West today at 404-913-1529 or fill out our contact form and speak to an experienced bankruptcy attorney to see if you qualify for a chapter 7 bankruptcy filing.