Chapter 7 Bankruptcy
Below are our most often asked questions about Chapter 7 bankruptcy.
What is Chapter 7 Bankruptcy?
Chapter 7 bankruptcy is a liquidation bankruptcy. Technically this means that upon filing bankruptcy, the court appointed trustee liquidates the assets of your bankruptcy estate and sells them for the benefit of creditors. However, that sounds a lot worse than it really is. Most Chapter 7 bankruptcy’s are considered ‘non-asset’ cases. This means that the trustee makes a determination that there are no assets to be liquidated for the benefit of creditors.
You may have assets such as a car or home, but this does not mean you will lose them as part of the bankruptcy proceeding. In fact, most debtors are able to keep all of their assets without losing one piece of property! When the bankruptcy laws were passed, the intent of the Chapter 7 Bankruptcy law was to give debtor’s (a debtor is a person who declares bankruptcy) a fresh start. Taking all of your assets and leaving you on the street corner is not giving you a fresh start. This is why the law allows you to keep assets under different exemption categories. There are exemption categories for your home, your car, your household goods, your retirement, etc.
What all of this means for you is that it is possible to discharge (discharge means to get rid of) your debt while keeping your home, car, bank account, and other assets. This gives you the ability to start over and truly get the fresh start the government intended.
Can I keep my belongings in a Chapter 7 Bankruptcy?
When we prepare your bankruptcy petition, we make sure to list all of your assets. We then place them into what are called exempt categories. There are different exemption categories and different standards for exemptions. We will determine which standards will best suit your situation.
Our goal is to ensure that you keep all of your personal belongings and assets. It is our job to represent you and make sure the bankruptcy is beneficial to you, our client. If we see problems with your case, we will be sure to let you know before you file.
In almost every case we handle, our clients are able to retain all of their assets.
attend the hearing with you, an attorney will be present to represent you to ensure your rights and that creditors are only allowed to ask questions which are relevant. Should any creditor get out of line, we are present to reign them in and control the proceeding.
When you go to Court, you must bring proof of your identify (driver’s license or other identification) and your social security card. If you do not have a social security card, you may bring other proof of your social security number such as a pay stub, medical benefits card, W2, or tax return.
If you do not bring these items, the trustee will continue the hearing and require you to come back a second time.
What is the Cost?
The Court will charge you $299.00 for the filing fee. This amount of money must be in a money order or certified check. The Court does not take cash or personal checks.
Our firm will charge you a base fee up front of $1,500.00. Depending on your case, there may be additional fees. Our fees are based upon our experience, expertise, and knowledge of bankruptcy. Our view of fees is that you get what you pay for. There are some firms out there who charge less than us and you may even be able to find a typing service to do it for you. But bankruptcy is a lot more than having a set of papers prepared.
Declaring bankruptcy is not a static event. Creditors must be contacted, communication with the Court must be maintained, and the trustee must be satisfied that your case is being handled properly. Taking care of these issues only comes with experience and exposure to the bankruptcy system and the Court. The Ledger Law Firm has the expertise, knowledge, and experience to ensure that you receive the best representation throughout the bankruptcy process.
Hiring The Ledger Law Firm provides you with a team that has the experience to make sure your case goes correctly and is ready to step in when the case does not go the way it should.
How will bankruptcy affect my marriage?
This is a touchy question to answer. We can’t tell you how it will affect your marriage, but our experience has been that most of our clients relationship problems stem from financial issues. Many of our clients have reported that their relationship improves once the stress factor of money is removed. It is a fact that the biggest reason people get a divorce is because of money problems.
What about co-signors on accounts?
If someone cosigned on a debt with you, then they are equally liable for the debt. Discharging the debt in bankruptcy will remove your liability on the debt, but the codebtor will still be liable. The company can collect against the co-signor.
Will I be able to buy a home after bankruptcy?
If you take steps to rebuild your credit using our bankruptcy case management software and you use your post bankruptcy credit responsibly, it will be possible to purchase a home at market interest rates in only a few short years.
How quickly you are able to purchase is up to you. Some people make rebuilding their credit a priority, others only get started when they want to purchase a home or new car. We recommend you start rebuilding the day after you file.
Do not try to rush into buying a new home or car immediately after your bankruptcy. Take the time to rebuild your credit and purchase a home you can afford with an interest rate you can handle.
Won’t bankruptcy ruin my credit for at least the next 10 years?
Wrong! This is the biggest myth about bankruptcy. Everyone thinks that filing bankruptcy destroys your credit. WRONG! It is what occurred before you filed bankruptcy that destroyed your credit. Most everyone waits too long to file bankruptcy. As your credit score dwindles so do your resources. Yes, bankruptcy will be on your credit report for 10 years. However, you will be able to begin rebuilding your credit immediately after your bankruptcy discharge.
Are all of my debts dischargeable?
No, certain taxes, student loans and child support, and other domestic support obligations are non-dischargeable. Debts incurred by fraud are non-dischargeable if the creditor brings an adversary action against you. This means that you will still be liable for these debts after the bankruptcy. A consultation with The Ledger Law Firm will assist in determining what debts may not be dischargeable from the above list.
Will I lose my house and/or car?
You can file bankruptcy and not lose your vehicle or your home. In fact, you can file bankruptcy and continue to make payments on your house and car as if the bankruptcy never happened. You are allowed certain equity exemptions so that losing your home and vehicle are not an issue. We will never let you file your case without making clear up front whether your home is at risk or not.
Should I keep certain debts?
It makes sense to keep paying on certain debts, like your home and your car. These are known as secured debts. There is a lien against the property you purchased with the money given to you by the creditor. For your other debts, like credit card and hospital bills, these are unsecured. You should NEVER reaffirm or keep these debts. This is a bad idea. Remember that these are corporations, not individuals who you are borrowing money from. They win either way, if you keep the debt you continue to pay and give them outrageous fees and interest. If you discharge the debt, they get to write the amount off on their taxes as bad debts.