Chapter 7 bankruptcies are usually not very complicated. Issues typically arise if the trustee thinks you are hiding assets or if a creditor takes aggressive action to collect on a debt.
Anyone in the United States can file for Chapter 7 bankruptcy protection. Some of the reasons you may be denied are:
- If you make too much money to qualify for a chapter 7, you may be required to file Chapter 13 and set up a repayment plan.
- The court finds that you are abusing the bankruptcy system.
- If you received a bankruptcy discharge within the last six years.
When you file for bankruptcy, you will submit a two-page petition, your financial statements, and a listing of your income, expenses, property, and debt. You will also need to provide contact information for all of your creditors. A bankruptcy attorney will know the court required documents and will help you with all of the paperwork.
When your paperwork is filed with the court, an automatic stay will go into effect. The stay prevents creditors from contacting you regarding your debt. All legal actions will stop, including any wage garnishments already in place, eviction or foreclosure notices.
If a creditor violates the automatic stay and attempts to contact you over the phone, mail or in any way, they could be forced to pay damages to you and pay your legal fees.
Your court-appointed trustee will represent your creditor’s interest. The trustee will examine your documents and determine if any property can be sold and distributed to your creditors. The trustee reports all of their findings to the bankruptcy court.
Meeting of the Creditors
The trustee will conduct a meeting of the creditors. This meeting is so the creditors can examine your financial plan and dispute any exemptions claimed. You must attend this meeting, the creditors, however, are not required to show up. These informal meetings can last anywhere from a couple of minutes to half an hour.
Before you can have your debt discharged, you must attend two court-approved financial counseling courses. One is a credit counseling course that must be completed before you file for bankruptcy, and the other is a pre-discharge debtor education course.
Once you have taken the legal steps required of you, your qualifying debt will be eliminated. You are no longer legally responsible for paying these debts.
For more information on what happens when you file bankruptcy, contact a Hidalgo County bankruptcy attorney to help you get a fresh financial start.