Chapter 7 Bankruptcy
Chapter 7 Bankruptcy is the type of bankruptcy that most people think of when they think about bankruptcy. It can be a painless process when the right resources are used.
A person who files Chapter 7 Bankruptcy is able to eliminate his/her debts except for debts that cannot be eliminated, such as student loans, government fines, child support, etc. The debtor who files bankruptcy gets to choose whether to keep his/her house and car. Bankruptcy is a “no fault” situation, so it does not matter why the person is filing bankruptcy or why these debts were incurred.
The filing of the chapter 7 bankruptcy stops all collection activities such as, garnishments, lawsuits, hate mail, harassing telephone calls, and any other type of debt collection. Debt collectors will promptly receive notice that a debtor has filed a bankruptcy.
If a creditor or debt collector continues to call you, threaten foreclosure, or send you bills after the bankruptcy has been filed, then contact my office with any questions and we may sue the creditor/debt collector over the dispute, and you may be able to recover money from this violation of federal law. We are always happy to be at your service.
Under federal law, a debtor must file his or her bankruptcy within the federal district in which he or she lives. Indiana, much like Ohio, has two federal districts: Northern and Southern. For instance, debtors whose home addresses are in Marion County reside in Indiana’s Southern District, and it is a federal requirement that they file there. A debtor’s residence also determines the location of his or her meeting of creditors. Although the meeting of creditors may feel like an administrative or judicial proceeding, debtors appear not before a Chief Judge, committee, or judges, but instead in front of trustees. These meetings normally take place at a federal Court House. However, due to Covid-19, meetings of creditors are currently being held telephonically or via Zoom. A debtor’s counsel will be present at the meeting. It is necessary for that counsel to be licensed in the appropriate federal district in order to file bankruptcy cases there. Additionally, in any jurisdiction, if debtors are wed and not separate, sharing an address, they may file their bankruptcy case jointly. However, one may only file jointly with one’s spouse, not just any family member.
SHOULD YOU FILE CHAPTER 7 BANKRUPTCY?
Typically, Chapter 7 Bankruptcy is the best option for most people. Indeed, it is not necessary for a debtor to claim extreme poverty to file a chapter 7. Many debtors who file chapter 7 bankruptcies are employees of for-profit businesses who own private property such as a car, or may even have a mortgage on their home. Numerous debtors who wish to retain a car on which they owe a debt, sign reaffirmation agreements allowing them to retain the cars while keeping the debt that they owe on them. This avoids repossession of that car by the credit lender. Of course, we will evaluate your financial situation to determine which option is in your best financial interest. If a chapter 7 bankruptcy is in your best finally interest, your counsel will file your case for you electronically. People who have filed a chapter 7 bankruptcy case in the past 8 years cannot file chapter 7–they have to file chapter 13. Numerous other factors determine which type of bankruptcy is your best financial interest.
A Brief Description of Chapter 7 Bankruptcy
The case begins with the filing of the bankruptcy petition which contains a lot of financial information about the client’s recent financial past. Debtors have an obligation to provide counsel with documents showing proof of their financial information and certain private property before the petition can be filed electronically with the US Bankruptcy Court. For example, a tax return, statements of funded bank accounts, and a copy of certain utility bills are requirements. Also, a copy of a credit report will be taken from the appropriate database to show proof of a debtor’s unsecured debts including credit card debt. Other documents and articles may become requirements also pending on the case. These necessary requirements are protecting debtors against the potential problem of committing fraud. Before a case is electronically filed in Indiana, the court requires payment of a filing fee to be paid to the clerk of the court. After that is funded, the first meeting of creditors or 341 hearing is scheduled in about 5 weeks. Typically, creditors do not attend this hearing.
The hearing is not in front of a judge and it is not in a courtroom. The hearing is conducted by a trustee–which is simply an attorney who attends the hearing on behalf of all of the creditors to determine whether the debtor has any assets that he or she cannot legally protect.
In Indiana, most people get to keep all of their assets and personal belongings. Most of my cases are called, “no-asset” cases, meaning that my clients get to keep all their belongings and assets and there is no asset that can be taken from them.
The counselors at this office have had numerous hearings with each trustee, so once we see who your case is assigned to, we will be able to tell you almost verbatim what you will be asked during the hearing. The trustees each have their own set of FAQs, also known as frequently asked questions.
A Chapter 7 Bankruptcy case takes approximately 5 months. At the end of the case, the client will receive a discharge of his/her debts which means that all debts are eliminated, not exchanged or consolidated, except for debts that cannot be eliminated or debts which that the client wants to keep, such as a house or car. Examples of debt that may not be able to be eliminated are alimony (or in Indiana, spousal maintenance), most tax debt, and student loans, assuming the debtor did not enjoy a free education at no cost.
What Happens After a Chapter 7 Bankruptcy?
Bankruptcy is not the end of credit. It is just the beginning. Typically, most clients receive numerous offers for credit after the filing of the bankruptcy case. If the client is careful about credit, the client’s credit score will rebound very quickly.
After the bankruptcy has been completed, my office will obtain your credit reports to ensure that all of your creditors are properly reporting your debts.
Credit reporting errors occur very frequently and we advise all clients that, for the next five years, if they ever try to obtain financing and they are declined, then contact us. We will not charge the client anything to review their credit reports to determine whether a creditor or debt collector is reporting an error on the credit report.
If any debt collector or creditor continues to call or harass you after your bankruptcy has been completed, please contact this office and we will sue the creditor or debt collector and you may be able to recover money from this violation of federal law.
Frequently Asked Questions Regarding Chapter 7 Bankruptcy
Q: How much is the filing fee to be paid to the clerk of the court?
Q: Are student loans dischargeable?
Q: Are the meetings of creditors private?
A: No. When held in person, they are conducted in front of other debtors and their counsel.
Q: Will I have to show proof of who I am?
A: Yes. It is necessary to provide a photo id and social security card.
Q: I live in Indiana now, but I incurred most of my debt years ago when I lived in Ohio. May I file in Ohio instead of Indiana where I currently live?
A: No. Those who live in Indiana must file in Indiana.
Q: Do I have an obligation to accurately account for all my assets?
A: Yes, that is necessary.
Q: Do I have an obligation to reaffirm the debt on my car if I do not wish to keep it?
A: No. You may allow your creditor to take back your car as a repossession.
Q: Will the trustee force me to cut up all my credit cards at the meeting?
Q: If I earn too high of an income to qualify for a chapter 7, is there a bankruptcy appeals court that might still tell me a chapter 13 is not necessary?
WHY CALL MY BANKRUPTCY FIRM?
Unsure of whether or not bankruptcy is right for you? Want to see if you are eligible for Chapter 7 bankruptcy? I am ready to discuss all your options with you in a free case evaluation. Find trusted, dedicated advice today at John Steinkamp & Associates.
- I have helped 1,000s of people to a fresh start
- My firm is backed by strong client recommendations
- 14+ years experience handling only bankruptcy cases
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