Chapter 7: What Is It and What Can I Expect?
A Chapter 7 Bankruptcy is the type of bankruptcy most people think of when they hear the word bankruptcy. It is often referred to as a straight bankruptcy or liquidation. In this type of bankruptcy you are required to list all of your property and all of your debts. Each state has developed exemptions for its citizens to use in bankruptcy. The exemptions are used to cover up the equity you have in your property. In the event that you do not have enough exemptions to cover up your property, then you may have to turn some property over to a Chapter 7 trustee for distribution to your creditors. For individuals with homes and vehicles they want to keep, a reaffirmation agreement must be entered or a redemption must be ordered. For an overview of what you can expect along the way, continue reading.
Your Free Initial Consultation
The process starts by meeting with an experienced bankruptcy attorney who will evaluate your financial picture to see if you qualify for a Chapter 7 bankruptcy, and whether a Chapter 7 bankruptcy would be beneficial for you. In order to file a Chapter 7 bankruptcy you are required to pass what is referred to as the "means test" implemented under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. The purpose behind the means test is to prevent consumers who could afford to repay some of their debt from filing a Chapter 7 bankruptcy. If you qualify for a Chapter 7 and your bankruptcy lawyer believes it is right for you, then you will be informed of the fees, the process, and what you need to do in order to complete your bankruptcy.
Getting Your Chapter 7 Bankruptcy Filed
Once you have provided the attorney with all the required documentation and have paid the fees, work will begin on your Chapter 7 case. Remember you generally are not protected from creditor lawsuits and garnishments until your case has been filed so the faster you get everything in, the sooner you will be free from creditor harassment. While your Chapter 7 bankruptcy is being prepared you can expect to receive e-mail, phone calls, and written correspondence from your attorney requesting missing information and documentation required to complete your bankruptcy petition and schedules. The bankruptcy preparation process generally takes one to two weeks for routine cases. In rare circumstances, such as when your home is about to be sold or your vehicle is about to be repossessed, your Chapter 7 bankruptcy case can be prepared and filed in as little as a day! If you have a complex case then the process could take months, but these types of cases are very rare and usually arise in business bankruptcies. Once your case is ready for filing you will receive a letter in the mail informing you of the next step.
Credit Counseling: A Bankruptcy Requirement
In order to file a Chapter 7 bankruptcy you are required to go to obtain a credit counseling certificate through an approved credit counseling provider. Our office will enroll you for the course, which can be taken at your leisure either online or over the phone by using the user ID and password we provided you. Credit counseling is one of two courses you are required to take under the Bankruptcy Abuse and Consumer Protection Act of 2005. Once your counseling is completed the company will send your certificate of credit counseling directly to our office. You do not need to worry about downloading, saving, or printing your credit counseling certificate. Your next step is to call our office and schedule an appointment to review your petition and schedules for accuracy. Remember under the Bankruptcy Code you are ultimately responsible for the accuracy of the information contained in your bankruptcy petition and schedules. If everything is in order you will sign your bankruptcy petition and schedules, and we will electronically file your bankruptcy.
Debtor's Education: Another Bankruptcy Requirement
Shortly after the filing of your case you will receive your bankruptcy notice telling you when and where your meeting of creditors will take place. Generally you and your spouse will need to show up at this court date, unless you are excused by the trustee due to reasons of disability, active military duty, prison, or other similar reasons. Also on the bankruptcy notice will be your bankruptcy case number. You will need your bankruptcy case number to complete the debtor's education course, which is required of every person filing for bankruptcy. You will go to the same website we gave you for your credit counseling and use the same user ID to complete your debtor's education course. Once you have completed your debtor's education, congratulations, you have completed all the courses you are required to take under the Bankruptcy Code. Next up is your meeting of creditors.
The Meeting of Creditors: Will They All Be There?
The meeting of creditors will generally be set approximately 30-45 days after your case has been filed. Although it is called a meeting of creditors, they rarely show up because the creditors as a whole are represented in the bankruptcy by a Chapter 7 trustee. The people in attendance at your meeting of creditors are normally the Chapter 7 trustee, other bankruptcy attorneys, and other individuals who have also filed for Chapter 7 bankruptcy protection. You will be required to bring two forms of identification to your meeting of creditors. The two most common forms of identification are a driver's license and Social Security card, which prove that you are the person who filed the bankruptcy petition. Once your case is called you will meet with the Chapter 7 trustee along with your bankruptcy attorney. The trustee will verify your identity and review your bankruptcy petition and schedules. The Chapter 7 trustee's job is to look for assets to distribute to your unsecured creditors. If you have fully disclosed information to your bankruptcy attorney, you will be well aware of the items you can keep and the items you may lose.
When Do I Get My Chapter 7 Bankruptcy Discharge?
Under normal circumstances, approximately 60 days after your meeting of creditors you will receive your Chapter 7 discharge. This will relieve you of your debt and provide you with the fresh start you had been waiting for.
What Is a Reaffirmation Agreement and Why Do I Need It for My Chapter 7 Bankruptcy?
Many individuals who file for Chapter 7 bankruptcy protection own vehicles, boats, homes, and other items that act as security for a lender's debt. Under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 — the most recent change in the Bankruptcy Code — individuals are required to enter into a reaffirmation agreement or are required to redeem the property in order to keep the home or car. Failure to reaffirm or redeem could result in you losing the item.
A reaffirmation agreement is essentially an agreement between you and your lender that the debt will not be discharged in your bankruptcy. You will continue to make your monthly payments as they become due and you will continue to be liable on the debt. If, after your bankruptcy is over, you ever default on the loan then the lender will be able to seize the collateral, sell it, and hold you accountable for any deficiency. A redemption is somewhat different than a reaffirmation. Unlike a reaffirmation agreement a redemption requires you to pay the value of the collateral within a certain period of time. Once you have paid the debt according to the redemption order the lender no longer will have a lien and you will own the collateral free and clear.
Experienced Rock Island and Davenport Chapter 7 Bankruptcy Attorneys
Our office is located in The Law Centre in downtown Rock Island, Illinois, just a short distance from both Iowa and Illinois federal courthouses. Our lawyers and professional staff proudly serve most clients throughout Western Illinois and Eastern Iowa. Call us toll free at 800-627-5704 or contact us by e-mail to arrange a consultation with an experienced Moline Chapter 7 attorney today.
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.
