Chapter 7 Bankruptcy cases are sometimes called “no asset” or “liquidation” cases. You are able to keep property up to a certain dollar amount to help you and your family get a fresh start in life. Because of these laws, rarely will you lose your car, and in most cases, you will be able to keep your home and household possessions as well.
At the conclusion of a Chapter 7 case, debtors receive a Bankruptcy Discharge. This releases you from having to pay most of your debts. The discharge includes a permanent injunction against collection of debt from you. This is the goal of any personal bankruptcy filing. The Discharge Order is mailed to you within 60 days after the 341(a) Meeting in most cases.
CHAPTER 7 LIQUIDATION AND DISCHARGE
Chapter 7 cases are completed in 5-7 months from filing to receipt of a discharge.
Before a case is filed, the Bankruptcy Law requires that individuals take and complete a consumer credit briefing from a company approved by the United States Bankruptcy Trustee's Office. This costs $35 to $50. The briefing takes about an hour. It can be done online or by telephone. The briefing company generates a certificate of completion good for 180 days. This is required before you can file. The briefing and course are in addition to legal fees and the Court's filing fee.
After your case is filed, you must take and complete another online or telephonic financial literacy course and file the proper paperwork. This is done in the same manner as the consumer briefing.
The person who wants a Chapter 7 fresh start must help their lawyer to prepare a list of debts and assets, complete a list of income and expenses, claim exempt property, answer questions on a statement of financial affairs, sign it under oath swearing it is true and accurate. The lawyer will file the petition with this information with the Bankruptcy Court. The filing fee of $338 must be paid when the case is filed.
The Court will issue the Notice of Commencement of Case and of the Automatic Stay to your creditors. This Notice contains a Court Order that the collection efforts stop. The Court will designate a Chapter 7 trustee to oversee the case and set a date, time and place for you to be interviewed under oath.
Even federal and NJ income taxes may be qualified for being discharges. Some debts are not dischargeable, such as child support.
You may qualify to a Chapter 7 by being under a certain earning limit based on your family size and your living expenses. If you do not qualify, you may need to have your case changed to a Chapter 13 or to see your case dismissed.
WHAT DOES A CHAPTER 7 BANKRUPTCY TRUSTEE DO?
The trustee's job is to understand your financial circumstances, read your filed court papers, ask you questions and look for property that the Bankruptcy Code says is over the amount you get to keep for a fresh start to turn into cash to pay your creditors.
The trustee wants you to play by the rules and exempt the property you are allowed by law to keep to help you get a fresh start.
You must attend the trustee meeting or your case will be dismissed. You must prove your identity to the trustee with a government-issued photo identification such as your driver's license or passport and prove your social security number by showing the trustee your card. Our law firm will help you provide copies of these required documents so you privacy is protected.
The trustee will ask you to promise to tell the truth. The Trustee will ask you questions about your bankruptcy papers and your financial circumstances. Trustee are interested in home ownership, any right you may have to sue because you have been injured, if anyone owes you money or if you might inherit money or other property within 180 days from the date your case is filed.
You MUST tell the trustee the truth about:
- Your assets
- If you have the right to sue anyone
- If you have inherited, or will inherit, something within 180 days of a bankruptcy filing
You MUST give the trustee anything the trustee says has become the trustee's property or satisfy a bankruptcy judge as to why the trustee is not entitled to the item or property. You must cooperate with the trustee unless a bankruptcy judge says in a court order that you do not have to do so.
You MUST NOT:
- Transfer anything of value because you plan to file bankruptcy
- Hide anything from the trustee
- Lie or tell the trustee something that is not true.
Many of our Chapter 7 clients who own homes end up keeping the house so long as they are able to keep paying the mortgage. The trustee may decide to sell your house or to abandon the trustee's interest in the house. This depends on what the house is worth and how much you owe on it after you get a credit for your exemptions and the anticipated costs of sale.
You may file a Chapter 7 case only once every 8 years.