When a person goes home from work each day, only to be greeted by a new group of bills, and messages from bill collectors, it becomes a depressing situation. Often, through no fault of your own, you have been overwhelmed with debt. This might have resulted from an unexpected illness, a job loss, or overspending. The reason, at this point, is not as important as taking action and doing something to get out of this situation. Chapter 7 Bankruptcy might be your solution.
Depending on your situation you might be required to take a ‘means test.’ This is to determine if you might be abusing the system. Chapter 7 does not involve any type of plan to repay debtors. Instead, you are appointed a trustee. The trustee will gather and sell any of the nonexempt assets you own and use the money to pay your creditors. However, you are allowed to keep some of your property. For example, a trustee will not take your clothes, kitchen utensils, or seldom your car. What the trustee is looking for is ‘high ticket’ items. This would include a boat, sitting in your garage, that you own free and clear. It might involve a second car in your household that is free and clear. Often the trustee does not collect anything to sell.
Chapter 7 begins with the debtor filing a formal petition. This is filed with the bankruptcy court. This document is very lengthy and it is useful to hire an attorney to handle the paper work. It is important that all of the schedules of assets and liabilities, current income and expenditure, statement of financial affairs, and all of the other requirements are 100 per cent accurate. Sometimes people find the paper work difficult to understand and complete. This is when an attorney can be of great assistance. One of the other important documents which must be filed is the certificate of credit counseling. This document shows the court that you have completed a course in credit counseling. There is a court charge of $245 for the case filing. Additionally, there is a $39 fee for miscellaneous administrative fees and a $15 trustee surcharge. Generally these fees must be paid to the clerk of the court when filing the paperwork – however, if you receive permission from the court you can pay these fees in payments.
After you file the paperwork this offers you an ‘automatic stay.’ This is intended to prevent any collection actions against you. This means that creditors cannot initiate or continue lawsuits, attachment of wages, or irritating telephone calls. After you file the trustee will hold a meeting of creditors with 21 to 40 days. Any creditor can attend, ask questions, and question the situation. Fourteen days later the court notifies if the case shall proceed or if there might be abuse. If the case proceeds the bankruptcy will be discharged after a period of months.