Chapter 7 bankruptcy is the most common type of bankruptcy filed in the United States. However, many people who file bankruptcy petitions under Chapter 7 are not familiar with the legal process and have little to no idea what to expect. It is important to understand the Chapter 7 process – the good and the potentially bad – so there are no unexpected delays or complications in your case. Before you file, you should always learn about the process from an Atlanta bankruptcy lawyer at Cornwall Law Firm.
The Automatic Stay
After you file your petition, you will experience an immediate benefit from the bankruptcy process – the automatic stay. This is a court order that goes into effect and halts all attempts by creditors to collect your debts. Your creditors will receive notification that you filed for bankruptcy, and they will have to stop any and all of the following:
The automatic stay provides immediate relief from the stress of constantly dodging collection class, as well as the strain a wage garnishment can put on your already suffering budget. If you were facing repossession of your vehicle or foreclosure of your home, you can buy some time as those cases will be paused. Be aware that some creditors – especially mortgage lender – may request that the court lift the stay before your case is over.
Getting a Trustee
Every Chapter 7 bankruptcy case will have its own trustee assigned to it. The trustee is the main point of contact for your case, as some Chapter 7 filers never even have to go to court. The trustee will review all of your paperwork and supporting documentation, looking for inconsistencies or errors. If the trustee suspects any fraudulent information, they can report it to the court. The trustee will also have several tasks during your case that we will discuss later in this article.
The Creditors Meeting
Also called the “341” Meeting of Creditors, this is a meeting that all Chapter 7 filers are required to attend. Your creditors are invited to attend this meeting if they wish to challenge the discharge of a particular debt. However, in many Chapter 7 cases, no creditors will be present at the meeting. Instead, this is primarily a time for the bankruptcy trustee to review all of the information you provided, including your income, debts, assets, and property. You will be under oath and will need to answer everything honestly. The trustee will compare your answers to your paperwork to make sure they have all the right information.
Giving Up Some of Your Property (Possibly)
Chapter 7 bankruptcy provides a relatively quick discharge of your debts without requiring you to make any payments. However, you might have to give up some property or assets in exchange. Fortunately, the law provides exemptions that you can use to protect as much property and funds as you can. There are exemptions available in Georgia for the following and more:
- Equity in your home
- Equity in motor vehicles
- Personal property
- Public benefits
- Tools of trade
- Alimony and child support
- Wildcard exemption
Spouses can double the standard exemptions if they file for Chapter 7 together. An attorney can help you apply for these exemptions in the way that protects as much property as possible, and some Chapter 7 filers do not lose any property or assets at all. If you do have to give up certain property, the trustee will liquidate it and apply it to priority debts.
Taking a Finance Course
The Bankruptcy Abuse Prevention and Consumer Protect Act of 2005 (BAPCPA) added some requirements for Chapter 7 filers before they can receive their discharge. One of these is to attend a personal financial management course from a provider approved by the government. This course is intended to educate consumers about how to manage their finances and avoid another bankruptcy case in the future.
Often, however, bankruptcy occurs for reasons beyond a person’s control, such as unemployment or a serious illness. Regardless of why you filed for Chapter 7 bankruptcy, you will still be required to take the course. If you live too far away from a provider, phone or online courses can be provided. The court will not discharge your debts unless you take the course within the required time period.
Receiving Your Discharge After Chapter 7
The final stage of your bankruptcy case is the discharge of your qualified debts. If the trustee saw no issues with your case, and you completed all of the requirements, the bankruptcy judge will issue an order that ends your obligation to pay certain debts. Such debts can include:
- Credit cards
- Medical bills
- Unsecured loans
- Loans from friends or family
- Business debts for sole proprietors
- Certain tax debts
- Civil judgments (with some exceptions)
- Past due rent
- Unpaid utility bills
You will no longer have to make payments on discharged debts, which often frees up significant funds to stay current on your remaining debts.
Post-Chapter 7 Life
After the court discharges your debts and closes your case, you will likely have a sense of financial relief. However, Chapter 7 bankruptcy reports on your credit for ten years, and any potential creditors within that time period will see that you filed for bankruptcy. This does not necessarily mean that you cannot get financing for ten years, as bankruptcy can actually improve your credit in the years following your case. Many people are able to rebuild credit in a healthy manner and are able to purchase homes, vehicles, and more.
Consult with an Atlanta Chapter 7 Bankruptcy Attorney
Chapter 7 bankruptcy cases can change your life in many ways. With the help of the right bankruptcy lawyer, this does not have to be a stressful process for you. At Cornwall Law Firm, we guide clients through every step of the case to ensure a successful outcome and a fresh financial start. To schedule a consultation to discuss your debt-relief options, please do not hesitate to call 404-791-4449 or contact us online today.