Chapter 7 Overview
Chapter 7, the most common type of bankruptcy, is sometimes referred to as "liquidation bankruptcy", or "straight bankruptcy". The basic purpose of Chapter 7 is to provide you with a fresh start by wiping out all qualifying debts including credit cards, medical bills, repossession deficiencies, and law suits as well as a variety of other debts.
In Chapter 7 there is no repayment required for most unsecured debts; your debts are wiped out completely and permanently. In about 99% of Chapter 7 cases, the consumer keeps all property, and eliminates most debts. The entire process usually takes less than 4 months to complete. After the bankruptcy is over, the consumer may choose to selectively pay back debts, such as debts to family members, however repayment is not legally required.
The Chapter 7 Process
In Chapter 7 the typical consumer only has one meeting with the bankruptcy trustee. This meeting is referred to as a “Creditor’s Meeting” or a “341 Meeting” after the section in the bankruptcy code that requires it (11 U.S.C. 341). The purpose of the meeting is to give creditors a chance to ask questions, although it is very rare that a creditor shows up; it is mostly handled by attorneys. The trustee may also ask you questions about particular items on your petition usually focusing on assets or income.
Most meetings take only a few minutes. Some consumers feel some level of anxiety or fear leading up to the meeting with the bankruptcy trustee, but there is no reason to fear the trustee. The trustee is looking for people who are hiding assets or trying to defraud the system, they don't want to harass or scare the common consumer. The meeting will take place in an ordinary conference room, and the trustee is not a judge; the setting is informal. After the meeting, the first thing most people say is "...that's it?...that was easy".
Once the meeting with the trustee is done, the only thing left to do is make certain to complete your Debt Education course, keep your address current with the court, and wait for your discharge to come in the mail.
Video: Creditor's Meeting
The Chapter 7 Discharge
An individual usually receives a discharge for most of his or her debts in a Chapter 7 bankruptcy case. A creditor may no longer initiate or continue any legal or other action against the debtor to collect a discharged debt.
But not all of an individual's debts are discharged in Chapter 7. Debts not discharged include debts for alimony and child support, certain taxes, debts for certain educational benefit overpayments or loans made or guaranteed by a governmental unit, debts for willful and malicious injury by the debtor to another entity or to the property of another entity, debts for death or personal injury caused by the debtor's operation of a motor vehicle while the debtor was intoxicated from alcohol or other substances, and debts for certain criminal restitution orders [11 U.S.C. § 523(a)]. The debtor will continue to be liable for these types of debts to the extent that they are not paid in the Chapter 7 case.
Debts for money or property obtained by false pretenses, debts for fraud or defalcation while acting in a fiduciary capacity, and debts for willful and malicious injury by the debtor to another entity or to the property of another entity will be discharged unless a creditor timely files and prevails in an action to have such debts declared nondischargeable [11 U.S.C. § 523(c); Fed. R. Bankr. P. 4007(c)].
Chula Vista bankruptcy attorney Jeffrey D. Poindexter has the skill and experience to guide you through the Chapter 7 bankruptcy process.Call the Chula Vista office of attorney J.D. Poindexter now for a free consultation! (619) 271-2382