Chapter 7

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A Chapter 7 bankruptcy is the most common type of consumer bankruptcy. A Chapter 7 typically will discharge or eliminate credit card balances, installment loans, medical bills, and most other unsecured debt. In nearly all cases, a debtor will keep all his or her belongings and property. If a debtor is current on his or her house and automobile payments, a debtor typically is able to continue the payments to his or her lender and retain possession in most Chapter 7 cases.

A Chapter 7 will take about three months from case filing until discharge, costs $306 in court filing fees (attorney fees are additional) and usually requires one court appearance in front of a trustee.

The first step in filing is to meet with one of our attorneys for a free consultation. The consultation takes approximately 30-45 minutes. At the consultation, the attorney will review your assets, go through a budget and review your debts. After the review, the attorney will have the background information necessary to give you proper legal direction for your debt relief.

Current law requires that all attorney fees be paid before a case is filed. Unfortunately, the current law makes it difficult for our clients to file, especially when they have to get a case filed immediately. However, our firm allows a case to be filed if there is a third party to guarantee the fees. We can file the case and bill the third party a monthly fee.

The law requires a debtor to take two financial classes. The first class, called Credit Counseling, is required before a bankruptcy petition can be filed. The class is designed to help debtors evaluate their financial situation. The second class, called Debtor Education, is required in order to receive a discharge. The class is designed to help debtors post-bankruptcy with their personal financial future.

After all the necessary information is provided to our office, we will prepare the bankruptcy petition. We need you to review and sign the petition, accuracy is important. You will return the signed petition to our office, and we will file it with the court.

When a Chapter 7 is filed, the automatic stay takes effect. The automatic stay immediately stops creditors from the many collection processes. The harassing phone calls, conciliation court dates and garnishment threats will cease. While the automatic stay is in place, creditors legally cannot garnish your wages, repossess your car or other property or cut off your utility service.

Approximately 30 days from your filing date you will be required to attend a Meeting of Creditors. The Meeting of Creditors generally lasts between five to ten minutes. This meeting is not in a typical courtroom setting and is not in front of a judge; instead, a specially appointed trustee administers the meeting. The trustee will inquire into your assets, liabilities and general financial condition.

At the conclusion of the Meeting of Creditors, most Chapter 7 debtors will not have any other court hearing. You have to wait about 60 days until the judge signs your discharge order. A discharge wipes out those debts that are dischargeable, and you no longer have an obligation to pay those debts.

A discharge is the beginning of the credit repair process. You should take steps to rebuild your credit to obtain better interest rates for future loans. Typically, if you properly and aggressively rebuild your credit, you can look at purchasing a home in three to four years with the appropriate credit rating.