What is Chapter 7

Chapter 7 can help you pay off your debts and start a new chapter in your life.

CHAPTER 7: A FRESH START

Chapter 7 Benefits

• You are discharged or (excused) from some of your debts.
• You can start your financial life over again.
• Creditors can no longer contact you or garnish your wages.
• Filing for Chapter 7 can help you protect your residence from a hostile creditor.
• You can file for Chapter 7 even if your finances are already being administered by a financial counselor.
• Your employer is usually not notified of your Chapter 7 filing.
• In many cases you keep what you need to start over, such as appliances, furniture, clothes and tools of your trade.

HOW CHAPTER 7 WORKS

Congress enacted Chapter 7 as a part of the U.S. bankruptcy laws so that people who were having a difficult time with their debts would have a way to become strong again. Chapter 7 offers you a way to pay your debts and get a new fresh start in life.  What's more, you get to keep the assests you'll need to start over.

A trustee helps you get your debts discharged, which means you're released from some of your debts, and you'll have a plan for paying others.

It's a good idea to let a bankruptcy attorney lead you through the steps of filing for Chapter 7 because it may seem complicated if you haven't filed before.  For example, the date you file is important because of the status of your bank accounts, your rent and other assets you may have, including bills you've already paid.

SOME COMMON QUESTIONS ABOUT FILING FOR CHAPTER 7 BANKRUPTCY

Will Chapter 7 excuse all my debts?

You can be discharged of all debts of any kind, any amount, including out-of-state debts.  But there are some debts which Chapter 7 does not excuse, such as:

• Most tax debts and debts incurred to pay federal taxes.
• Debts for alimony, support, and certain other divorce-related debts, including property settlements.
• Debts for student loans that became due within the last seven years (unless the court decides othewise).
• Debt for personal injury or death caused by driving while intoxicated.

These are just a few examples.  Call us to discuss and go over the complete list.

What does Chapter 7 do to my credit rating?

Truthfully, it does worsen it.  Still, some banks and financial institutions welcome business from people who have recently filed for Chapter 7 because it will be 8 more years before a person can file under Chapter 7 again.  If you've had to file because of an illness or injury, many credit rating agencies will take that into account.

Will anyone discriminate against me for having filed Chapter 7?

It's illegal for private or government employers to discriminate against a person who has filed a bankruptcy.  No local, state or federal agency can refuse you a driver's license, a permit, a student loan or any similar grant.  Filing a Chapter 7 is not a criminal proceeding, and you can't lose any of your civil rights by filing.

Will I lose all my property?

You get to keep your house and car.  You'll also be able to keep what you need to make a new start in life.  Property you have may be exempt, which means creditors can't take it.  You can even keep some property that you may owe money on, such as tools of your trade, your furniture and your clothes.  We can advise you of ways to keep the things you need.

Do I have to appear in court?

Most clients do not appear in court.  However, there is a meeting with a trustee who will ask you questions about your debts.  Usually no creditors are there, but if they do appear, you must answer their questions.

What if I have no property for the trustee to collect and convert to cash?

Most Chapter 7 cases are like this, and we call them "no-assets" cases.  If you don't have any assets from which to pay creditors, the trustee notifies your creditors that they may as well not file a claim.  If assets are discovered later, creditors get a chance to file a claim.

Are there ways I can minimize what I have to turn over to pay my debts?

Absolutely.  It's best to go over your situation in detail with your bankruptcy lawyer.  Things from prepaid rent to any cameras and sporting goods equipment you own can all be preseverd in certain ways.  It makes sense to be aware of the letter of the law and let us help you use it to your advantage.

What's the difference between a secured creditor and an unsecured creditor?

Secured creditors are creditors who hold a valid mortgage or lien against property you own, such as your car or house.  Unsecured creditors do not have valid liens against your property.  The court usually allows a secured creditor repossess property unless the property is worth far more than what you still owe on it.  Unsecured creditors must wait for payment from the proceeds of the sale of your property, and administrative expenses and other expenses are paid first.

Can my creditors still try to collect a debt from me even after it has been discharged?

No, and the creditor who tries will risk being held in contempt of court.  Furthermore, you may be able to sue that creditors for damages.

What if there are some debts I really want to make sure get paid?

Even if a debt is discharged, you can choose to pay it.  And choosing to pay one doesn't mean you have to pay all of your discharged debts.

Am I Eligible to File?
The Answer is YES, if:

• You live in, own property in or do business in the United States, and
• You haven't been involved in another bankruptcy cases that was dismissed within the last 180 days on certain grounds.
• You may still be eligible to file even if you have filed bankruptcy before.
• Call our office at (915) 566-4300 to make an appointment to discuss your options REMEMBER NO COST TO YOU.