CHAPTER 7 FREQUENTLY ASKED QUESTIONS:
What is a Chapter 7 Bankruptcy and how does it work?
Chapter 7 is that part of the Federal Bankruptcy Law that deals with "discharging" your legal obligation to repay certain debts. You do not lose all of your property if you file a Chapter 7 bankruptcy. In order to receive a discharge, you must obey the orders and rules of the Court.
What is a Chapter 7 discharge and how long does it take?
A Chapter 7 discharge is a Court Order releasing a Debtor from all dischargeable debts and ordering the creditors not to attempt to collect them from the Debtor. A debt that is discharged does not have to be repaid. Some debts, however, are not dischargeable under Chapter 7 and some persons are not eligible for a Chapter 7 discharge. It takes approximately five (5) months after the filing of the case for the discharge to be final and approximately six (6) months after the filing of the case for the case to be closed entirely. However, a debtor is still protected from collection activity upon filing the bankruptcy.
Are some debts not dischargeable under Chapter 7?
Some taxes and most student loans, also child and spousal support, criminal fines and penalties, debts obtained under false pretenses, criminal debts, and property damage or personal injury caused by driving while under the influence may not be discharged.
Do I have to appear in court for a Chapter 7 Bankruptcy?
You do not have to appear in Court, but you do have to appear at a Meeting of Creditors, also known as the 341 Meeting.
Where is the Meeting of Creditors held and how long does it last?
The Meeting is held in the Schaaf Building at 170 North High Street on the 2nd Floor and lasts approximately 10 to fifteen minutes.
What happens at the Meeting of Creditors and what do I need to take to the Meeting?
A Court appointed Trustee will ask you questions. Many of these questions will be the same ones you answered in my office. Your hearing will take place in a conference room setting. Creditors may be there to ask questions about your debts, but they generally do not show up. You will receive a list of items to bring to the hearing with your hearing notice. Each Debtor must attend the hearing.
Can creditors collect from me after filing bankruptcy even if a lawsuit has been filed?
In almost all cases creditors must cease all collection activity upon the filing of your bankruptcy case, even if a judgment has been filed against you.
What is a reaffirmation agreement?
An agreement to repay a debt, usually for purposes of retaining property used as collateral, e.g., a car or a house, for a loan.
What debts do I continue to pay?
Pay only those debts that you intend to keep. If you are going to retain your home or your automobile continue to make those payments. Also, continue to pay rent and current utility bills. If you have listed past due utility bills in your bankruptcy you may be required to pay a deposit.
When am I fully protected from my creditors?
You are fully protected from creditors or collectors when your case is filed with the Court.
If a creditor contacts me after I retain you, what do I do?
After retaining me, refer all creditor and collector calls to my office. Be sure to give my name and phone number.
What is the difference between a secured and an unsecured debt?
A secured debt is guaranteed by a certain item or items. For example, when you buy a car, the car, also known as collateral, secures the loan; if you don't pay on the loan, then the lender can repossess the collateral (the car). An unsecured debt has no property securing the loan; for example, signature loans, medical bills, utility bills and, especially, credit cards.
Will I lose my retirement, pension, 401k or deferred compensation funds?
I will review your retirement or pension plan with you. In most cases, if your plan qualifies under ERISA it will not be lost in the bankruptcy. An attorney must review deferred compensation plans before a conclusion is reached.
Will I lose my tax refund?
In many cases you will be able to keep up to $800 for single case and up to $1,600 for a joint case, if both debtors were working during the tax year in question. Depending upon what time of year we file, varying amounts may be taken by the Chapter 7 trustee. Generally this applies to only one tax year.
How does filing a Chapter 7 affect my credit rating?
A bankruptcy filing will stay on your credit report for up to ten years. Certain financial institutions offer secured credit card accounts. This may be an excellent way to reestablish your credit. Reaffirmations also may help to reestablish payment history.
If you are not sure that you want to file bankruptcy, contact my office for a free consultation to help you arrive at a decision.