Chapter 7 Bankruptcy allows debtors to wipe out most debts and get a fresh financial start. Chapter 7 is known as a “liquidation” type of bankruptcy. Debtors in Chapter 7 can eliminate credit card debt, medical bills, stop wage garnishments, eliminate debt related to foreclosures and repossessions and more. There are a number of costly mistakes debtors can make though. And, every debtor’s situation is different. That’s why it’s important to consult an experienced attorney to assess your situation.
Here’s some basic information on the process, and what you can and cannot do. For a more complete list of what you can and cannot do, you may want to visit the website for the United States Bankruptcy Court for the District of Nevada: http://www.nvb.uscourts.gov/debtors/. Of course, this information is not intended to prepare you to file Bankruptcy on your own. Instead, it is intended to give you a brief overview.
On average, a Chapter 7 case takes between 5 and 7 months, but depending on the specific facts of a case, may be longer or shorter. Debtors first must take a credit counseling course. Although this sounds intimidating, it is nothing to be worried about. Debtors may take this short course over the internet, and Hamilton Law clients may do so at our office if they wish.
After taking the required credit counseling course, debtors begin their bankruptcies by filing a petition. In the petition, debtors list lots of information about the financial circumstances, including information about their assets, liabilities, and income. Hamilton Law streamlines this process for its clients and can help clients compile information about their debts and creditors.
Between 30 and 45 days after filing the case, debtors must attend a meeting of the creditors at the Federal Bankruptcy Court. This is an opportunity for creditors and the trustee overseeing your bankruptcy case to ask questions about your bankruptcy petition. Although creditors are welcome to attend, in the overwhelming majority of cases they do not. This is because in most cases it simply is not worth their time. Most meetings are short – 5 minutes or less – and the questions are usually easy to answer.
Hamilton Law attends all meetings at the Court with its clients. We will call you before the date to remind you of the meeting, and to make sure you are well-prepared for the proceeding. We are also there in case any difficult issues arise.
After the meeting of the creditors, debtors will need to take a second course: a financial management course. Again, this course may be taken on the internet and at Hamilton Law’s office if clients wish.
The last thing for debtors to do in the typical case is to wait for their “discharge.” The discharge is an order from the Court indicating that all the debts the debtor included in the bankruptcy have been eliminated. This is the goal of the whole bankruptcy process. Once a debtor receives the discharge, there typically is nothing more in the case for the debtor to do.
A few more points about Chapter 7 are worth mentioning.
-There are certain debts that cannot be eliminated in a Chapter 7 and are referred to as “nondischargeable debts.” The main nondischargeable debts are domestic support obligations like child support, tax debts, and student loans. There are a number of other nondischargeable debts that are beyond the scope of this page. As a basic rule of thumb, if you have a debt or are involved in a legal dispute, you should tell your attorney about it.
-Debtors are allowed to “exempt” certain property and so long as the exemption complies with the law, debtors can keep exempt property. In fact, because Nevada has generous exemption laws, debtors typically are able to keep most, or all, of their property.
-Smart bankruptcy planning is crucial and, if not done, can lead to expensive problems. As an obvious example, debtors cannot purchase large-screen televisions on their credit cards the week before filing bankruptcy and then wipe out that credit card debt. But there are smart and legal ways to plan your bankruptcy so as to maximize the amount of property you can keep and minimize the amount of debts you must repay. It is important to discuss your bankruptcy strategy with a qualified attorney.