New Bankruptcy Law

• The Basics of the new laws and how they effect a filer.

Chapter 7 Bankruptcy

• It it Right for You? Are you still eligible?

Chapter 13 Bankruptcy

• Overview of Chapter 13 Bankruptcy

Credit Cards & Bankruptcy

• Discharging Credit Card Debt

How to File

• Filing Bankruptcy

Find a Local Attorney

• Attorney's who specialize in Bankruptcy Filings

All About Chapter 7 Bankruptcy

Chapter Seven bankruptcy is not something that you should jump into with both feet without understanding what it is all about. For some it seems as though filing for Chapter Seven bankruptcy will make all your problems go away quickly and easily, but it really isn't that simple. Filing for Chapter Seven bankruptcy will require your time, and even your money to have it done right, and your credit will be affected, so be sure you understand everything and you're sure there isn't a better solution for your current financial situation before you proceed.

What is Chapter Seven bankruptcy?

Chapter Seven bankruptcy is a type of bankruptcy that does in fact cancel all of your current debts. While all of your debts will be canceled, the bankruptcy court will sometimes sell some or all of your property to help pay off some of the creditors that insist on being paid. Chapter Seven bankruptcy is often referred to as liquidation bankruptcy, because the court will typically liquidate as many of your assets as possible, so this is something to seriously consider before you decide that Chapter Seven is the best course of action for you. Chapter Seven bankruptcy gets its name from the chapter of the federal statutes of bankruptcy code.

If you assume that you can simply file for bankruptcy and be done with it all, you should think again. Most Chapter Seven bankruptcies take anywhere from four to six months and cost about $300 to file, for administrative fees related to your filing, but only requires you to go to the court house one time. If you are only filing for bankruptcy because you feel like you need a quick escape from your problems, you'll want to think about how long four to six months really is!

Can everyone file for Chapter Seven bankruptcy?

Chapter Seven would seem like the best way for everyone to escape their debt problems, but it isn't that simple. Chapter Seven bankruptcy isn't available to everyone. You will now be allowed to file for Chapter Seven bankruptcy if you've:

• Received a bankruptcy discharge in the last eight years
• If you could complete a Chapter 13 repayment plan based on debt and income

Of course, these may not be the only exemptions that may apply to each individual that is interested in filing for Chapter Seven bankruptcy. The best thing you can do is get with a bankruptcy specialist that can really take an in depth look at your situation and then you can decide together if Chapter Seven bankruptcy is the best plan of action for you and your specific circumstances.

How do you file for Chapter Seven bankruptcy?

The actual process is not as difficult as one would think. Typically, you'll need to complete a two-page petition as well as few other forms. Once you complete the forms you will file the petition along the forms with the bankruptcy court in your state, city, or county. In these forms you will be asked to detail your property, your current income and employers, your monthly living expenses, all of your debts, all exempt property which is the property you believe the law will allow you to keep even though you are filing for chapter seven bankruptcy. You'll also need to detail property you owned and money you've spent in the last two years, and the property you've sold or have given away as gifts in the last two years. You'll also be required to file a certificate with the court that proves that you have completed an approved credit-counseling program. There is a list of these approved agencies that have been approved by the United States Trustee at www.usdoj.gov/ust. For people facing an imminent credit emergency such as foreclosure, you can submit just the two-page petition, but everything else must be filed within 15 days of that first submission for the process to continue.

Do you qualify for Chapter 7?

What is an order for relief?

The order for relief is also known an automatic stay, and when you file for bankruptcy this is put into affect. The order of relief stops creditors from pursuing the debts that you owe to them. This is a temporary way to stop creditors from garnishing your wages, debiting funds from your bank account, repossessing your car, foreclosing on your house or other properties, and even cutting off your utility services or welfare benefits. This is just a temporary order, but it will help those that file experience immediate relief from the pressure of creditors and debts.

What you must understand when you file for Chapter Seven bankruptcy you must understand that you are turning over control of your debts and your property to the court. You will not be allowed to sell or even give away any of the property that you currently own from the moment you file for bankruptcy. You will also not be allowed to pay off your debts that you have included in the filing without first getting the permission of the court to do so.

What happens next?

After you've filed for bankruptcy the bankruptcy trustee will look through your information and see if there isn't any property that can be sold to help pay off your creditors even in a very minimal capacity. A week or two after you file a creditors meeting will be scheduled. This is a meeting where you will typically be asked whether all the information on your filed papers is true, and though the creditors are invited they usually do not attend. This meeting will take five minutes or less.

After the meeting, the trustee will determine if you have nonexempt property to sell at which time you may be required to hand it over to the court or to sell it and provide the cash to the court to help pay off a portion of your debts. Exempt items are considered personal items such as clothes, equity in vehicles, necessary furnishings, and appliances, jewelry limited to a certain dollar amount, life insurance, pensions, and tools for your trade, unpaid but earned wages, and public benefits. Other than these items, the court may decide to liquidate anything and everything else. Luckily, most Chapter Seven applicants don't have to surrender property because they creditor can't get much from the property to help repay debts.

What happens at the end of the Chapter 7 process?

In the end you'll have all of your current debts erased by the court with the exception of debts that automatically survive the process such as taxes, student loans, and child support, as well as debts incurred by fraudulent or malicious acts on your behalf. After the bankruptcy you will be able to go about life as you did before, though you no longer legally owe all the discharged debts. You'll find that you can begin rebuilding your credit right away, but it will take quite some time before you can receive a great rate on a car loan or mortgage, if you can secure one at all. It's important to remember that you cannot file for Chapter Seven bankruptcy again for eight years after you've filed. This means that you should only apply for Chapter Seven when it is truly necessary as it's something that is meant to be done once, and only in the most dire financial situations.