Unlike a Chapter 13 bankruptcy, a Chapter 7 bankruptcy doesn’t involve a repayment plan. Instead, the bankruptcy trustee gathers and sells your nonexempt assets and uses the proceeds to pay creditors in accordance with the provisions of the Bankruptcy Code. The debtor’s property may also be subject to liens. When you file a petition for bankruptcy under Chapter 7, it may result in the loss of property.
Qualifying for Chapter 7 Bankruptcy: Attorney J Thomas Smith
Individuals, corporations and partnerships qualify for relief under Chapter 7, irrespective of the amount of debt or whether one is solvent or insolvent. And while a Chapter 7 bankruptcy may result in a discharge of debts, it’s not absolute. Some types of debt may not be discharged.
A chapter 7 bankruptcy begins by filing a petition with the bankruptcy court where a business is located or where an individual lives. In addition to filing with the court, some of the items the debtor must provide include:
- Provide schedules of liabilities and assets
- Provide schedule of expenditures and current income
- Submit executory contracts and unexpired leases
- Submit a statement of financial affairs
- Provide copies of tax returns
- File a certificate of credit counseling
- Provide statement of monthly net income
What Happens Next
After filing a petition for Chapter 7 bankruptcy, collection actions come to an automatic stay. As long as the stay is in effect, creditors are not allowed to implement wage garnishments, initiate lawsuits or call you demanding payment. The bankruptcy clerks puts all creditors on notice of the impending bankruptcy. A bankruptcy trustee will administer the case and liquidate the debtor’s nonexempt assets. Most Chapter 7 bankruptcy cases involving individual debtors are no asset cases. Generally, it takes 60 to 90 days.
Because a Chapter 7 discharge is subject to many exceptions, it’s always wise to consult an experienced Chapter 7 bankruptcy attorney before filing. This way, you’ll know the scope of the discharge. If you’re considering filing a Chapter 7 bankruptcy, turn to attorney J Thomas Smith to see if it’s a smart move for your individual circumstances.