Why File for Bankruptcy?
- Unemployment for various reasons including COVID-19 (Coronavirus)
- Medical expenses
- Mortgage debt
- Credit card debt
What are the Benefits of Bankruptcy?
- Help Eliminate Debt
- Stop Creditor from Contacting You
- Stop Wage Garnishment
- Keep your Home from Foreclosure
- Keep your Car
Chapter 7 Bankruptcy
Chapter 7 bankruptcy is for individuals that have little to no income who are unable to pay their creditors. A bankruptcy begins by filing a petition. If you are married, you and your spouse have the option of filing a petition jointly or individually. If a married couple choose to file a joint petition, the bankruptcy will include marital property and debts shared by both spouses as well as individual property and debts that is owned separately. If a married couple choose to file individual petitions, the bankruptcy will only involve individual property and debts. Filing for joint bankruptcy is typically less time consuming and more cost effective because it requires fewer documents to be filed. However, filing an individual petition can sometimes be more advantageous depending on the specific financial situation of the spouses.
What is the filing fee?
The filing fee for a chapter 7 bankruptcy is $335.00. (That amount includes $245.00 for the case filing fee, $75 for the administrative fee, and $15 for the trustee surcharge.) The filing fee does not include our office's reasonable fee.
Am I eligible for Chapter 7 Bankruptcy?
To be eligible for Chapter 7 bankruptcy a debtor:
- Must be an individual, married couple or a business entity;
- Must have a current monthly income that is below the state median or pass a means test;
- Must complete court approved credit counseling within 180 days prior to filing;
- Has not discharged a bankruptcy in the past 8 years; and
- Has not been subject to a bankruptcy dismissal in the past 180 days.
Who is a Trustee?
After a bankruptcy is filed, the United States Department of Justice appoints a trustee to oversee the case and detect for possible fraud. Trustees act as an independent intermediary between clients, creditors, and the judge. In Chapter 7 Bankruptcies, trustees are appointed to make recommendations to the court regarding the liquidation and division of assets.
The bankruptcy trustee gathers and sells the debtor's nonexempt assets and uses the proceeds of such assets to pay creditors in accordance with the provisions of the Bankruptcy Code. Part of the debtor's property may be subject to liens and mortgages that pledge the property to other creditors. In addition, the Bankruptcy Code will allow the debtor to keep certain "exempt" property; but a trustee will liquidate the debtor's remaining assets.
Credit Counseling & Debtor Education
Chapter 7 bankruptcy requires the completion of two educational courses. Pre-bankruptcy credit counseling must be completed within 180 days prior to the filing of a bankruptcy petition. The purpose of credit counseling is to determine whether bankruptcy is necessary or if a payment plan can be established to resolve the debts. The second educational course that must be completed is post-bankruptcy debtor education. The purpose of debtor education is to provide the financial skills necessary to succeed after bankruptcy such as tips on how to create a budget and rebuild credit. A certificate of completion of debtor education must be submitted to the court within 60 days of the date of the first meeting of creditors.
How Chapter 7 Bankruptcy Works
Our office files a petition with the bankruptcy court along with schedules of assets and liabilities; a schedule of current income and expenditures; a statement of financial affairs; and a schedule of executory contracts and unexpired leases as well as other required documents.
Common Documents Needed:
- A list of all creditors and the amount and nature of their claims;
- The source, amount, and frequency of the debtor's income;
- A list of all of the debtor's property; and
- A detailed list of the debtor's monthly living expenses, i.e., food, clothing, shelter, utilities, taxes, transportation, medicine, etc.
Clients must also provide the case trustee with:
- A copy of the tax return or transcripts for the most recent tax year as well as tax returns filed during the case (including tax returns for prior years that were not filed when the case began)
- Check stubs, if any, received 60 days before filing
- A statement of monthly net income and any anticipated increase in income or expenses after filing
- A record of any interest the debtor has in federal or state qualified education or tuition accounts
Between 21 and 40 days after the petition is filed, the case trustee will hold a meeting of creditors. During this meeting, the trustee puts the debtor under oath, and both the trustee and creditors may ask questions. Typically, creditors do not attend the meeting of creditors. The debtor must attend the meeting and answer questions regarding the debtor's financial affairs and property. Said meeting may sound difficult or make you nervous. However, said meetings are conducted in a respectful and pleasant manner. If a husband and wife have filed a joint petition, they both must attend the creditors' meeting and answer questions.
The Chapter 7 Bankruptcy Discharge
A discharge releases you from personal liability for most debts and prevents the creditors owed those debts from taking any collection actions against you.
You may wish to keep your house and/or a vehicle. You and the creditor may enter into a reaffirmation agreement where the debt will not be discharged in bankruptcy, but the terms and conditions of the reaffirmation agreement may be different than the prior obligation. Said agreements must happen before the discharge of bankruptcy is final.
How long will the bankruptcy process take?
A Chapter 7 Bankruptcy can typically be completed and discharged within three to six months.
Does filing for bankruptcy discharge ALL debt?
Not all debts are discharged, including the following:
- Spousal Support
- Child Support
- Certain tax debt
- Student Loans (with minimal modifications)
- Criminal matters
- Certain loans and/or large credit card purchases made in the last 60 days
Fogt Law Can Help You
We will be there for you throughout the whole bankruptcy process. We can help give you back your peace of mind and give you a fresh start with your finances.