CHAPTER 7 LIQUIDATIONembed
Chapter 7 of the Bankruptcy Code is called a Liquidation Bankruptcy. Chapter 7 offers debtors the opportunity to discharge, or wipe out, their unsecured debts, such as credit cards, medical bills, repossession deficiencies, unsecured loans, etc.
CHAPTER 7: LIQUIDATION Chapter 7 of the Bankruptcy Code is called a Liquidation Bankruptcy. Chapter 7 offers debtors the opportunity to discharge, or wipe out, their unsecured debts, such as credit cards, medical bills, repossession deficiencies, unsecured loans, etc. without having to make any payments out to the creditors. The case generally lasts 4 months from beginning to end. At the conclusion of the case, you receive an Order of Discharge officially zeroing out those debts. There are certain types of debts that are not dischargeable in a Chapter 7, such as recent IRS tax debt, alimony, child support, student loans, etc. A discharge is only available to individuals and families. It is not available to businesses. In order to qualify to file Chapter 7, you must earn less than a certain amount of money. The amounts change from time to time and depend on the size of your household. If you are over that amount, a means test can be completed to see if you still may qualify to file Chapter 7 based upon your debts and your living expenses. In order to determine your income, the Court will look back at the last 6 months of income prior to filing the case. To determine if you qualify, please contact me so we can schedule a free consultation. In order to file Chapter 7, you must complete a credit counseling session prior to the start of the case. After filing, you must complete a financial management course. Both of these courses are available online and over the phone. Approximately 30 days after filing the petition with the Court, you must attend a Meeting of Creditors, where your creditors are invited to come to the courthouse along with yourself and your attorney and meet with the Chapter 7 Trustee. Even though creditors are invited to attend this meeting, they rarely do. A typical meeting usually has only the person filing, their attorney and the Chapter 7 trustee. The trustee is assigned by the Court to administer the case and will ask the person filing certain questions about their paperwork. The meeting generally lasts from 5 to 10 minutes. Sixty days after the Meeting of Creditors is the deadline for a creditor or the trustee to file an objection to the discharge of your debts. These objections do not occur very often. After the 60 days expires, the judge will then sign the order of discharge officially wiping out those debts. There are two ways that you can protect your property in a Chapter 7: Texas Exemptions and Federal Exemptions. You can choose the exemption that best protects your property. If you moved from another state within the past 2 years, you may need to use the exemptions of the state from where you moved. Any property that is left non-exempt, or unprotected, is subject to the trustee seizing that property, selling or liquidating it, and using that money to pay off some of your debt. This is why Chapter 7 is called a liquidation type of bankruptcy. Don’t stress, though. In 95 percent of the Chapter 7 cases filed, the Debtors do not have any non-exempt property, meaning that they can keep everything. We will analyze your property and exemptions when you come in for the free consultation. A Chapter 7 will stay on your credit report for a period of 10 years. This does not mean, however, that you will never qualify for a car loan or even a house loan during that time. As long as you have sufficient income, you should qualify for a car loan within about 12 months after discharge and a house within 24 months. There are no exact time frames, but generally speaking, these two periods of time are accurate. Within just a few weeks of your discharge, you will receive several offers for new credit cards. If you would like to see if you qualify to file bankruptcy and to learn more about the process, please contact me at 281-847-4345 or email me at [email protected] to schedule a free consultation. Kemsley Law Firm, PLLC http://kemsleylaw.com/ 505 N. Sam Houston Parkway E., Suite 400 Houston, Texas 77060 281-847-4345