Chapter 7: What It Is
The Benefits of a Chapter 7 Bankruptcy
Chapter 7 Bankruptcy Offers You the Most Complete Relief
At O'Bryan Law Offices, our experienced bankruptcy attorneys help people decide whether to file for bankruptcy, and which form of bankruptcy relief to choose if options are available. For most people, Chapter 7 bankruptcy will result in the most complete relief from indebtedness. To find out whether you are eligible for Chapter 7 relief and whether it’s right for you, contact us in Louisville, Frankfort or New Albany for a free consultation. Also, you can read the Frequently Asked Questions to learn more about Chapter 7.
Most unsecured debts are eligible for discharge in Chapter 7
The main benefit of bankruptcy under Chapter 7 is the prospect of a complete discharge of most unsecured debts. Although certain obligations like recent taxes, student loans or child support are not dischargeable in bankruptcy, you can end up walking away from most other claims: credit card debt, medical bills, revolving loan accounts, or any other debt that is not supported by collateral or covered by some rather narrow exceptions. Not everyone qualifies for Chapter 7 relief, however. Your gross household income has to be no greater than the state median in Kentucky or Indiana, as the case may be. We can analyze your income and expenses to see whether you qualify for Chapter 7 bankruptcy.
Proper use of exemptions helps get the full benefit of Chapter 7
In theory, at least, the principle of Chapter 7 is to sell off your assets and divide the proceeds among your unsecured creditors, leaving you supposedly without property but at least free of debt. However, fortunately it doesn’t really work that way. Both Kentucky and Indiana have detailed schedules of exemptions that allow you to claim certain property as unavailable to creditors. In most cases, holders of unsecured claims collect little or nothing from you, and you keep everything you have.
People with substantial equity in their homes or who own valuable nonexempt property might find Chapter 13 debt consolidation and repayment plan to be a better choice, that way, there is little or no risk that you will have to liquidate assets to meet the claims of creditors. Many of the Chapter 7 cases we file are “no-asset” cases that expose the debtor to no risk of loss.
We work closely with our clients to get the most out of Chapter 7
The Chapter 7 discharge is the most complete relief available under the Bankruptcy Code, but it comes with certain responsibilities. You need to make a full and accurate disclosure of your debts and assets. Your case will be supervised by a trustee, who will be interested to see if there are nonexempt assets available for unsecured creditors. The trustee can also recommend denial of discharge or dismissal of your case if you don’t follow the bankruptcy rules.
Our lawyers make sure that you understand your responsibilities and we help you meet them. The vast majority of Chapter 7 debt relief cases proceed smoothly from filing to final discharge, which is our goal in every case. To learn more about our Chapter 7 bankruptcy practice, contact us at O'Bryan Law Offices in Louisville, Frankfort or New Albany.
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.
Is Chapter 7 Bankruptcy Right for Me?
A Chapter 7 bankruptcy filing completely discharges most debts of an individual or business. In most cases, an individual may keep certain significant assets. A business can continue operations. It is inaccurate to view Chapter 7 bankruptcy as an admission of failure or the end of the line. Sometimes Chapter 7 bankruptcy is your best option.
O'Bryan Law Offices can evaluate your situation and discuss your options, including a possible Chapter 7 bankruptcy filing, or debt relief through a Chapter 13 bankruptcy (for individuals) or a Chapter 11 bankruptcy (for businesses).
Call us at 502-400-4020 for a free, no obligation consultation.
Chapter 7 Bankruptcy can be filed for Individuals
For certain individuals, Chapter 7 bankruptcy provides complete debt relief and a chance to begin your financial life again. The alternative is Chapter 13 bankruptcy in which you file a repayment plan that allows you to re-pay a percentage of your debt, based on a number of factors. If you have insignificant or negative equity in your house, Chapter 7 bankruptcy may be right for you.
O'Bryan Law Offices has helped many people in the Kentuckiana area to obtain consumer debt relief through Chapter 7. If it is the right solution for you, our firm can act immediately to end creditor harassment, the threat of repossession, foreclosure, and wage garnishment, and begin the process of debt relief. We can also help you take steps to restore your credit after bankruptcy.
Chapter 7 Bankruptcy can also be filed for Businesses
O'Bryan Law Offices has a successful track record helping business clients restore their financial health through Chapter 11 bankruptcy, business reorganizations, and through workouts without recourse to bankruptcy. However, when these are not viable options, it makes sense to take the Chapter 7 bankruptcy route.
In considering a business Chapter 7 bankruptcy, O'Bryan Law Offices will look for ways to isolate the business owner’s personal assets from the business assets.
Whether it involves an individual or a business Chapter 7 bankruptcy, O'Bryan Law Offices seeks to put our client in the strongest financial position possible at the conclusion of the process.
For a free initial consultation with a Chapter 7 bankruptcy lawyer at O'Bryan Law Offices, call 502-400-4020 or contact us online.
Chapter 7 Bankruptcy Timeline
8 or 6 Years Before Your Chapter 7 Bankruptcy
You are eligible for a Chapter 7 discharge after 8 years have passed from the date you filed a prior Chapter 7 case and received a discharge; or after 6 years have passed if you filed a Chapter 13 case and received a discharge.
4 or 2 Years Before Your Chapter 13 Bankruptcy
You are eligible for a Chapter 13 discharge after 4 years have passed from the date you filed a prior Chapter 7 case and received a discharge or after 2 years have passed from the date you filed a Chapter 13 case and received a discharge.
If you have tried to delay or defraud your creditors by transferring, hiding, or destroying your property within a five-year period prior to your bankruptcy, the court may deny you a Chapter 7 discharge and even allow your creditors to recover the property that you transferred.
1 Year Before Your Chapter 7 Bankruptcy
If you pay back one of your creditors who is also a relative or close business associate (“insider”) at any time within the 1-year period prior to the filing of your bankruptcy case, any amount over $600 may be recovered by the Chapter 7 trustee and the amount may then be distributed to your other creditors.
If you had a prior bankruptcy case dismissed within one year of the time you file a Chapter 7 case, the Automatic Stay entered in the Chapter 7 case will be terminated within 30 days unless you can demonstrate that the Chapter 7 case was filed in good faith.
180 Days Before Your Bankruptcy
If within 180 days before your bankruptcy you had a prior bankruptcy case that was dismissed because you failed to obey court orders or you voluntarily requested a dismissal, then you may not file your bankruptcy case until this 180 day period expires.
Also, within 180 days of your bankruptcy filing, you must receive an individual or group briefing from an approved non-profit budget and credit-counseling agency.
90 Days Before Your Bankruptcy
You must be a resident of the state in which you intend to file your bankruptcy case for at least 90 days before the filing. If you have not lived in the state in which you intend to file your case for at least 90 days, you may only file your case in the state where you have resided, or which has been the location of your principal assets, for a majority of the prior 180 days.
Also, if you pay back any of your creditors over $600, even one who is not a relative or close business associate (“insider”), at any time within the 90-day period prior to the filing of your bankruptcy case, the payment may be considered a “preference” payment and the court may recover the amount over $600 and distribute it to your other creditors. This usually does not apply to payments on secured loans like mortgages and car notes.
If you incurred new debt of $500 or more for “luxury goods or services” within the 90-day period before your bankruptcy, or if you obtain a cash advance in the amount of $750 or more within a 70-day period before your bankruptcy, the debt is presumed to be nondischargeable.
You meet with our law firm for the initial consultation, retain our office and receive the bankruptcy packet of information for your completion. You complete your first step of credit counseling.
You return to our office for your Be-Back appointment where you meet with your paralegal to drop off your completed questionnaire, documents and attorney fee balance.
You return a third time to our office to meet with your attorney and paralegal to review and sign your petition and ask any follow up questions.
Your Case is Filed!
Your case is formally commenced when we file your bankruptcy petition with the appropriate bankruptcy court. As soon as we file your petition, the court will enter an Automatic Stay order prohibiting your creditors from taking or continuing any collection or legal action against you. This means no more harassing letters or phone calls while your case is in progress.
Next, the court will send a notice of your case to all of the creditors listed in your petition.
Additionally, the bankruptcy court will assign a bankruptcy trustee to oversee your case. The trustee is a federal employee appointed by the court to monitor your case and make sure you are eligible for bankruptcy. The trustee will review your petition, make sure that it is complete, and then schedule a meeting of your creditors.
15 Days After Your Case is Filed
You have a deadline of 15 days after you file your petition to file certain financial “schedules” with the court. These are documents declaring your assets, liabilities, expenses, income and a statement of your affairs. In most cases, however, we will file these forms for you with your petition.
Approximately 15 Days After Your Case is Filed
Within approximately 15 days after you file your case, the court will mail the Notice of Commencement of Case to you and to all of the creditors listed in your petition. This notice will inform you of the date set by the court for the meeting of your creditors, and the deadlines for your creditors to object to your case and file their claims against you.
Approximately 30 Days After Your Case is Filed
Within 30 days after you file your case, or before the meeting of your creditors if that occurs first, you are required to file a Statement of Intention. In this document, you advise the court whether you intend to keep your property that serves as collateral for your debts, or whether you intend to surrender it to your creditors. Again, our firm will file this form for you.
If you intend to keep the property, you must indicate your intention to: (1) reaffirm your debts and continue making all of your payments on those debts; or (2) redeem the property by paying the fair market value for it, in which case you will receive a discharge of debt owed over the fair market value of the item.
45 Days After Your Statement of Intention is Filed
You have 45 days after your Statement of Intention is filed to surrender or keep your property as you indicated in your Statement and make all necessary payments.
Approximately 6 Weeks After Your Case is Filed
The court will hold the Meeting of Your Creditors about six weeks after your bankruptcy case is filed. At least seven days before this meeting, you are required to provide to the trustee and any creditor requesting it, a copy of your most recently filed tax return. We will do this for you!
The court-appointed trustee will preside over this meeting. At the meeting, which you are required to attend, you will be asked to testify under oath as to the accuracy of the statements in your petition. However, most of your creditors will not appear at the meeting, and you will not be before a judge. The meeting is very informal, and in most cases will last no more than 10 minutes. If you do not attend the meeting, your case will be dismissed.
Within 45 days after you file your petition, you must file a statement containing a certificate from your attorney that you received an explanation of the various chapters available to you under the bankruptcy code, evidence of any payments you’ve received from any employer within 60 days of your filing, an itemized statement of your monthly income, and an estimate of any increase in income or expenditures you expect over the next 12 months.
30 Days After the Meeting of Your Creditors
The bankruptcy trustee and your creditors have to object to all of your exemption claims within 30 days after the conclusion of the meeting of your creditors.
60 Days After the Meeting of Your Creditors
Your creditors have 60 days after the date first set for the Meeting of Your Creditors to object to the discharge of any of the debts listed in your petition and schedules.
Your creditors can object to your request to discharge a debt if the debt was obtained or incurred as a result of any of the following types of misconduct: fraud; embezzlement or larceny; and any willful or malicious injuries you have caused others; or a divorce or separation (this does not include debts for child support and spousal maintenance, which are nondischargeable by law).
Additionally, your creditors can object to the discharge of all your debts if you have engaged in any of the following conduct: concealment or destruction of property or financial records; false statements; withholding information; failing to explain losses; failure to respond to material questions; or a discharge in a prior case.
The trustee must move to dismiss your case within this time period if he finds that the granting of relief would be an abuse of the provisions of Chapter 7. You will receive your Chapter 7 discharge 60 days after the meeting of your creditors You will receive your discharge as soon as the 60-day time period for objecting to discharge or moving to dismiss your case expires. Even if you receive your discharge, the trustee may, however, move to set it aside if you do not turn over nonexempt property or if you commit other bankruptcy violations.
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 imposes one last hurdle before you’re eligible for your discharge–the financial education requirement. This requires you to complete an instructional course concerning personal financial management. Your attorney can refer you to an approved financial management class.
90 Days After the Meeting of Your Creditors
If you have an asset case which you most likely will not have, all of your creditors (except for government entities) must file their proofs of claim (these are documents your creditors submit to the court specifying how much you owe them) within 90 days after the first date set for your creditor meeting if they wish to share in the payments from your case if any assets are available for liquidation.
If your case was a no asset case and there were no objections filed by the trustee and/or your creditors, your case will be discharged and closed out.
Finally, you should order copies of your credit reports from all three credit-reporting agencies to make sure that all of the debts you intended to discharge are zeroed out on your credit report with a notation that the debt was included in your bankruptcy. Pay the extra fee to receive your credit score.
Call us if your credit report is not accurate and we can help you dispute any inaccuracies in order to immediately improve your credit score.