Chapter 7 Bankruptcy
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Chapter 7 bankruptcy is designed to help people who are unable to pay their existing debts. The purpose of filing a Chapter 7 case is to obtain a discharge of your existing debts (in other words, to wipe out all of your debts; therefore you are no longer to be held legally or financially responsible for your debt).
Under Chapter 7 a trustee, who is an attorney assigned by the court to determine if you have any assets which may be seized for the benefit of your creditors, takes possession of your property that is not considered “an exempt asset”. Chapter 7 bankruptcy can help stop foreclosure.
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Unfortunately, under a chapter 7 bankruptcy not every debt can be wiped out. Debts that are not wiped out include:
- In a chapter 7 bankruptcy most taxes (please review IRS Publication 908 with an attorney).
- In a chapter 7 bankruptcy current and back child support.
- In a chapter 7 bankruptcy current and back Alimony.
- In a chapter 7 bankruptcy student loan default.
- In a chapter 7 bankruptcy court-ordered fines from the state or federal government.
- In a chapter 7 bankruptcy restitution debts obtained through fraud or deception.
- In a chapter 7 bankruptcy personal injury debts caused by driving while intoxicated or taking drugs.(unless the bankruptcy court determines that the repayment of those debts / loans would create an undue hardship on you).
You should know you have certain legal rights and must be very selective of the Lawyer or Law Firm that you chose to represent you. You stand a much better chance of success at acquiring true debt relief by aligning yourself with, skilled New York, bankruptcy lawyers of the Castiglia-Rubinstein Law Firm. Our attorneys are not only trained in handling simple bankruptcy matters, we take care of complex bankruptcy litigation in Nassau County, New York, Suffolk County New York, Brooklyn, Kings and Queens Counties New York and, on Long Island and all New York City boroughs including Bronx, Westchester, Richmond County, and Manhattan New York.
In Chapter 7 bankruptcy, the bankruptcy trustee cancels many (or all) of your debts. At the same time the trustee might also sell (liquidate) some of your property to repay your creditors. Chapter 7 bankruptcy, also called “straight” or “liquidation” bankruptcy, is so named because the law is contained in Chapter 7 of the federal Bankruptcy Code. Here’s an outline of Chapter 7 bankruptcy — who can file, the forms you’ll need, how the process works, and what happens to your property and debts.
Chapter 7 Bankruptcy Filing Fee Costs and Time and Money
The whole Chapter 7 bankruptcy process takes about four to six months from beginning till end and the filing costs $335 in filing and administrative court fees. You must also complete credit counseling with an agency approved by the United States Trustee.
Who Can File
You won’t be able to use Chapter 7 bankruptcy if you already received a bankruptcy discharge in the last six to eight years (depending which type of bankruptcy you filed) or if, based on your income, expenses, and debt burden, you could feasibly complete a Chapter 13 bankruptcy repayment plan. (Learn more about the Chapter 7 bankruptcy eligibility requirements.)
To file for Chapter 7 bankruptcy, you fill out a petition and a number of other forms and file them with the bankruptcy court in your area. Basically, the forms ask you to describe:
- your property
- your current income and monthly living expenses
- your debts
- property you claim the law allows you to keep through the Chapter 7 bankruptcy process (called “exempt property”) — most states let you keep some equity in your home, clothing, household furnishings, Social Security payments you haven’t spent, and other necessities such as a car and the tools of your trade
- property you owned and money you spent during the previous two years, and
- property you sold or gave away during the previous two years.
Bankruptcy Magic — The Automatic Stay
Filing for Chapter 7 bankruptcy puts into effect something called the “automatic stay.” The automatic stay immediately stops most creditors from trying to collect what you owe them. So, at least temporarily, creditors cannot legally grab (“garnish”) your wages, empty your bank account, go after your car, house, or other property, or cut off your utility service.
Bankruptcy Court’s Control Over Your Financial Affairs
By filing for Chapter 7 bankruptcy, you are technically placing the property you own and the debts you owe in the hands of the bankruptcy court. You can’t sell or give away any of the property you own when you file, or pay off your pre-filing debts, without the court’s consent. However, with a few exceptions, you can do what you wish with property you acquire and income you earn after you file for bankruptcy.
The Bankruptcy Trustee for Chapter 7 Bankruptcy
The court exercises its control through a court-appointed person called a “bankruptcy trustee.” The trustee’s primary duty is to see that your creditors are paid as much as possible of what you owe them. And the more assets the trustee recovers for creditors, the more the trustee is paid.
The trustee (or the trustee’s staff) will examine your papers to make sure they are complete and to look for nonexempt property to sell for the benefit of creditors. The trustee will also look at your financial transactions during the previous year to see if any can be undone to free up assets to distribute to your creditors. In most Chapter 7 bankruptcy cases, the trustee finds nothing of value to sell.
The Creditors Meeting
A week or two after you file, you (and all the creditors you list in your bankruptcy papers) will receive a notice that a “creditors meeting” has been scheduled. The bankruptcy trustee runs the meeting and, after swearing you in, may ask you questions about your bankruptcy and the papers you filed. In the vast majority of Chapter 7 bankruptcies, this is the debtor’s only visit to the courthouse.
What Happens to Your Property
If, after the creditors meeting, the trustee determines that you have some nonexempt property, you may be required to either surrender that property or provide the trustee with its equivalent value in cash. If the property isn’t worth very much or would be cumbersome for the trustee to sell, the trustee may “abandon” the property — which means that you get to keep it, even though it is nonexempt.
Most property owned by Chapter 7 bankruptcy debtors is either exempt or is essentially worthless for purposes of raising money for the creditors. As a result, few debtors end up having to surrender any property, unless it is collateral for a secured debt (see below). To get a better understanding of what may happen to your property in bankruptcy.
How Your Secured Debts Are Treated
If you’ve pledged property as collateral for a loan, the loan is called a secured debt. The most common examples of collateral are houses and automobiles. If you’re behind on your payments, the creditor can ask to have the automatic stay lifted in order to repossess or foreclose on the property. However, if you are current on your payments, you can keep the property and keep making payments as before — unless you have enough equity in the property to justify its sale by the trustee.
If a creditor has recorded a lien against your property because of a debt you haven’t paid (for example, because the creditor obtained a court judgment against you), that debt is also secured. You may be able to wipe out the lien in Chapter 7 bankruptcy. Get in-depth information on how your secured debts are handled in our legal area. What happens to your debt & property in chapter 7 bankruptcy?
The Chapter 7 Bankruptcy Discharge
At the end of the bankruptcy process, all of your debts are wiped out (discharged) by the court, except:
- debts that automatically survive bankruptcy, such as child support, most tax debts, and student loans, unless the court rules otherwise.
- debts that the court has declared non-dischargeable because the creditor objected (for example, debts incurred by fraud or malicious acts on your part.).
We are dedicated to your success so contact us. Speak with one of our knowledgeable Long Island chapter 7 bankruptcy attorneys, personal bankruptcy litigation attorneys today from wherever you are in New York in Nassau and Suffolk, Brooklyn, Kings and Queens Counties, on Long Island and all New York City boroughs including Bronx, Westchester, Richmond County, and Manhattan.
Call 1-800-960-1529 today.
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code. Get Help With Chapter 7 Bankruptcy Plan Now be prepared before creditors freeze your bank account or garnish your pay.
You should know you have certain legal rights and must be very selective of the Lawyer or Law Firm that you chose to represent you. Have an attorney council you on the right decision for you.