Filing for bankruptcy is a serious decision, so it’s critical that you understand your options, whether you qualify, and how the filing process works. With the guidance of a reputable attorney, filing for bankruptcy doesn’t have to be a stressful, confusing process. Rather, taking this route can help you get back on your feet and start fresh. Below, Ron Lundquist, Attorney at Law, explains what you need to know about Chapter 7 bankruptcy.
What Is Chapter 7 Bankruptcy?
Chapter 7 bankruptcy, also referred to as liquidation bankruptcy, eliminates all of your unsecured debts without filing a plan of repayment. Those debts include but are not limited to:
● Bank loans
● Credit card debts
● Utility bills
● Medical bills
● Business debts
However, specific debts will not be discharged, including certain taxes, student loans, and child support or alimony. In addition to those debts, there are a few other exceptions to discharge, which your attorney can discuss with you.
When you file Chapter 7, the court prevents creditors from attempting to collect payments, foreclosing on your home, and repossessing your property. With the stay on your current debts, creditors also cannot garnish your wages, turn off your utilities, or evict you.
Though many people assume they’ll lose personal property if they file for Chapter 7, that’s usually not the case. Most Chapter 7 cases are “no asset” cases, which means all of the individual’s property is exempt.
If you’re considering filing for bankruptcy and are worried about losing property, don’t hesitate to consult with my office. We’ll determine whether your property is exempt and get you started on the road to financial recovery.
Qualifying for Chapter 7 Bankruptcy
If you’re considering filing for bankruptcy, you’ll need to meet a few requirements to file for Chapter 7, including:
● You must complete a credit counseling course from an approved agency with 180 days before you file.
● You must pass a means test, which determines whether your disposable income is high enough to make partial payments on your unsecured debts
● You must not have filed for Chapter 7 in the last eight years.
● You must not have filed for Chapter 13 in the last six years.
● You must not have attempted to file for Chapter 7 or Chapter 13 and had your case dismissed in the last 180 days.
● The court may dismiss your case if it determines you are attempting to defraud creditors.
If you do not meet the requirement to file for Chapter 7, you may still be able to file for Chapter 13 bankruptcy. Your attorney can advise you on the best options to meet your unique needs.
How Does Filing Chapter 7 Affect Your Credit?
A Chapter 7 record can stay on your credit report for up to 10 years from the date you file. However, the accounts that were included in the case may fall off your report earlier than that. After seven years, most of the negative accounts on your credit report are automatically removed.
Chapter 7 Bankruptcy: The Filing Process
Though you can elect to file for Chapter 7 on your own, it’s not recommended. Working with a knowledgeable, experienced bankruptcy attorney is always the preferable option as there are many intricacies you may not understand. Once you and your attorney have determined you are eligible to file for Chapter 7, here’s how the process works:
1. You’ll attend and complete credit counseling from an approved agency.
2. You’ll file the necessary forms.
3. When the court accepts your filing, you’ll send verification documents to your court-appointed bankruptcy trustee.
4. You’ll attend a meeting of the creditors, during which you’ll have a brief interview regarding your situation and paperwork.
5. You’ll attend and complete budget counseling within 60 days of the creditor meeting and send proof of completion to the court.
6. You’ll wait for your court-issued discharge notice, which often arrives within 60-75 days of your creditor meeting.
While you wait for your discharge notice, you may be required to give your trustee any non-exempt property, if you have any. Don’t give away or sell anything without your trustee’s permission.
Considering Filing for Bankruptcy? Contact Ron Lundquist, Attorney at Law
If you live in the Twin Cities and are struggling to pay back your debts, please understand you have options. Get in touch with my office today to discuss your case and whether filing for bankruptcy is the right decision for your needs. To schedule a free consultation or learn more about how my team can help you, call my office today at 651-454-0007 or connect with my team online.