What Is Chapter 7 Bankruptcy?
Well, what are your goals for filing for bankruptcy? Do you want to come out of a financial crisis and begin anew? If so, then Chapter 7 of the Bankruptcy Code allows you to do this quickly. This section of United States Bankruptcy Code allows the debtor, or the bankruptcy Trustee, to sell all non-exempt material possessions and to distribute the proceeds to the creditors. Normally when Chapter 7 bankruptcy petitions are filed, the debtor has no assets to lose. There are mostly just bills. Converting your assets to money (also known as liquidation) allows the debtor to restart his or her life quickly with a completely clean slate.
Is Chapter 7 Bankruptcy The Right Choice For Me?
Each case is unique and you may want to speak to one of our attorneys before making a final decision on filing for bankruptcy. That being said, Chapter 7 Bankruptcy is the most common class of bankruptcy filing as it accounts for as much as 65% of all Consumer Bankruptcy filings. As long as the parties, including creditors and the trustee involved don’t object to this bankruptcy proceeding, this is often the fastest way to file for bankruptcy and allows a debtor to start the next step in his/her life.
With Chapter 7, it will only take a few months for the debtor to be discharged of most (if not all) of his/her debts. However, your ability to seek relief under Chapter 7 of the federal bankruptcy code depends on whether or not you meet the financial qualifications to do so. The starting point to determine your qualification for a Chapter 7, or liquidation bankruptcy, is to have a bankruptcy attorney discuss the “means test” with you. Not everyone will pass scrutiny under the means test and those that don’t, cannot file for bankruptcy protection under Chapter 7 of the Bankruptcy Code.
How Does Chapter 7 Bankruptcy Work?
The first step of Chapter 7 Bankruptcy is for the appointed trustee to gather all the debtor’s non-exempt property. The trustee will then sell the assets and divide the resulting proceeds among the proper creditors. There are 19 broad divisions of debt that are discharged under Chapter 7 Bankruptcy. The debtor will receive a discharge on all dischargeable debts under Chapter 7.
In Chapter 7 Bankruptcy filings, the debtor in control of asset value will sign the title over to the trustee. Next, the debtor receives a payment that is no more than the specified exemption amount. This is one of the differentiators between Chapter 7 and other Bankruptcy filings: the debtor does not need to make a “payment” to the trustee. Afterwards, creditors will receive a distributed pro rata portion of any leftover funds from the sale of the asset. Another differentiator of Chapter 7: the asset payment is made in one lump sum instead of a regular payment to the trustee over 3-5 years, like in Chapter 13 Bankruptcy.
There is some risk with Chapter 7 Bankruptcy, because in a many of cases the debtor could lose nearly all of his/her non-exempt assets. Of course you are worried about losing your assets, you should speak to one of our Bankruptcy Attorneys to help guide you in the right direction.
In addition to being speedy, Chapter 7 has other advantages. For instance, a debtor can continue to pay for a car loan or for the mortgage on their house if they sign a reaffirmation agreement. This reaffirmation agreement is allowed in part because the United States Bankruptcy Code permits debtors to keep some or all of their property.
How Do I File For A Chapter 7 Bankruptcy?
As simple as filing for bankruptcy seems, there is a long list of unintelligibly complicated rules and procedures that must be followed. Before you start anything, you must be sure that bankruptcy is the right path for you. If so, the next step is to determine whether Chapter 7, Chapter 13 or some other portion of the United States Bankruptcy Code fits your particular financial dilemma. Next, you can fill out our evaluation form and speak to one of our experienced bankruptcy attorneys about your specific case. As long as you have fully and honestly completed the evaluation, our attorneys can take care of the rest and can complete your bankruptcy filing.
Our team of Mid Michigan Bankruptcy attorneys is available to assist you 24 hours a day, seven days a week and every day of the year. If you are in need of immediate legal assistance, call 1-517-886-1000. Our main office is conveniently located in Lansing, Michigan.