More steps in the Chapter 7 Bankruptcy Process

Personal financial management course

All debtors must attend a course on managing finances in order to receive your discharge. The US trustee approved certain courses and providers to be used to build this obligation. You can find a list of approved agencies at the US trustee’s website at www.usdoj.gov/ust. Like I said in a previous article the scores cost anywhere from $10-$30, at least it did when I took it, and it’s my understanding that if you are unable to pay for the course, you may be able to receive it free of charge… however, I believe you have to go to some extent to prove that you are unable to pay the small price for the course.

The bankruptcy discharge

As of this writing I’m still waiting for my discharge and it’s been about three months since my creditors meeting. Although I’ve heard it can take as little as two months, I’ve also heard from some people that it’s taken as long as 6 to 8 months to receive their discharge. I’m sure that the more complete your papers are and the more simple your cases the faster you will receive your discharge.

You may not understand what the discharge is so let me explain that, quite simply, it essentially means that your case is over… in other words, you are debts have been discharged.

After bankruptcy

Once you receive your discharge you’re free to go about your financial life as normal… that includes applying for any loans, mortgages, or credit cards, however, you may find it difficult to get any of those at first. From what I’ve read, and the trustee has told me, there are certain things you must report to the court even after your discharge. This includes things like insurance proceeds, inheritance, or proceeds from a divorce settlement, so if any of those apply to you, where there are any other situations that occur after your discharge, you should consult an attorney as to whether or not you have to report that to the trustee.

Many people are worried that it may be difficult to get a job after bankruptcy and that an employer could pass you over for someone else because you have a bankruptcy on your record. This is a valid concern, and it’s one that I share, and I’m sure that in the lawyer, if you are she works on Klein, could discriminate based on the fact that you file bankruptcy. However, the law is on your side on this one, and it states that an employer is not able to discriminate based solely on the bankruptcy… nonetheless, it’s my understanding that there are exceptions to this rule.

I used to work in the mortgage business and frequently saw people only two or three years out of bankruptcy with 680 and above credit scores, which is good, and means that if you’re responsible, you should have no problem rebuilding your credit and continuing your life normally only a few years after your bankruptcy is discharged.

You cannot file another chapter 7 bankruptcy case until eight years have passed after your previous filing date. So from now on, you really need to be careful with your finances, for your own benefit, and because you won’t be able to take advantage of the bankruptcy laws to file another chapter 7 case for at least eight years. I believe however, you can file Chapter 13 within eight years of your Chapter 7 filing if need be, however, you can receive a Chapter 13 discharge until four years have passed since you filed for your previous chapter 7.

The 341 meeting of creditors

As explained in a previous article, you will receive notice of the date that your creditors meeting is to be held. My creditors meeting, also known as the 341 meeting, was held about two months after I filed my papers. My meeting was held at the courthouse where I filed my papers and consisted of me and the trustee who interviewed me; none of my creditors even showed up to that meeting.

The trustee runs the meeting and, at the beginning, will swear you in under oath and then begin to ask you questions about your bankruptcy and the documents you filed. My understanding is that there are a series of standard questions the trustee will always ask you as well as some clarifying questions in case anything was not clear in your documents.

Some standard questions he or she may ask you include whether or not you’ve given anything away in the last year and whether the information you put in your papers is 100% accurate. In my case, the entire questioning lasted only a matter of minutes.

It’s my understanding that creditors rarely attend this meeting, but if they do they will have a chance to question you under oath. It’s my understanding that in most Chapter 7 bankruptcy cases this is the only personal errand, aside from filing your papers, that you will have to make… In fact, you can actually file your papers by mail if you really want to.

What happens to your property

In your bankruptcy papers, you’ll be asked to fully explain your current financial situation, including listing all of your assets and any debts (liabilities) that you have. In your papers you have the opportunity to claim certain assets as exempt, which means the trustee will not even consider those to be used to repay your creditors. Each state has different exemption rules and you should consult an attorney or read the NOLO book to find out the exemptions that apply to you.

If, after your 341 meeting, your trustee determines that you have non-exempt assets, those assets may be sold in order to repay your creditors. I believe you also have the opportunity to pay the trustee a specified amount of cash in exchange for keeping those assets.

It’s my understanding that the trustee is unlikely to search your home or seized any assets you have, but he or she will order you to turn over any nonexempt property if it’s determined that you have nonexempt property that should be used to repay your creditors.

Even if you have nonexempt property it may not be worth very much, or it could be hard to sell, in which case the trustee would probably “abandon” it, which means you will get to keep it even though it’s nonexempt.

Secured debts

If you pledged property as collateral for a loan, that loan is called a secured debt. Most car loans are debts secured by your car, and most home mortgages are secured by your home. It’s my understanding that if you keep current with those payments you can keep the property through bankruptcy. However, if you do not keep current on the payments, that property can be seized and returned to the creditors.

Filing your bankruptcy papers

To begin a Chapter 7 bankruptcy case, you must complete a packet of papers that is known as your bankruptcy petition. This packet of papers is where you will describe in detail your complete financial situation. These documents should be filled out as accurately as possible and will be used by the trustee in determining whether or not to discharge your bankruptcy.

Although the packet is quite large, many of the forms do not require much time to complete and are fairly simple and straightforward.

Once you file your bankruptcy petition you will receive a notice from the court telling you when you’re 341 meeting is set to be held. The 341 meeting is also called a meeting of creditors, and is where your creditors will have a chance to speak with you and the trustee.

At your 341 meeting your trustee interviews you about your financial situation and how you got into debt as well is why you are filing for bankruptcy. Your creditors have the opportunity to show up at this meeting and ask you questions as well as speak with the trustee. However, most creditors don’t even show up for the meeting in a Chapter 7 case.

The automatic stay

In many cases, when people file for bankruptcy protection, they have already faced perhaps months or even years of arrests made from creditors trying to recover their money. Filing for bankruptcy puts a stop to all collection actions immediately upon filing the papers with the court. Your creditors will be notified of your bankruptcy, however you may continue to receive calls for a short period after that. In that case, give the credit for your attorneys phone number or, in the case of pro se filers, the creditor will want to know your bankruptcy case number, after which they should no longer try to contact you.

The court controls your finances

Once you file a Chapter 7 bankruptcy, everything you own is in the hands of the trustee… Now that does not mean he or she will take possession of your things, in fact they probably won’t, what that means is that it’s up to the trustee to decide whether to sell your things to pay back your creditors or to allow you to keep all your possessions. In my case, and in most other cases I’ve heard about, the Chapter 7 filer is able to keep all of his or her possessions because, in a Chapter 7 case, you usually don’t have that much left.

What does bankruptcy cost?

The entire chapter 7 bankruptcy process takes about three months, during that time there are a number of steps you must complete. Specifically, three main steps that cost money. The first is the credit counseling, which you can expect to spend anywhere from $10-$30 on. The credit counseling can be completed online as little as a few hours.

The second cost you’ll incur is the $299 filing fee, which you’ll be required to pay to the court when you file your bankruptcy petition.

And finally, you must complete a financial course before your bankruptcy can be discharged cost of this course is anywhere from $10-$30 and can also be completed online.

While these three major steps and costs involved in filing Chapter 7 bankruptcy are the only mandatory costs, depending on your situation you may encounter some other costs involved. For example, you may have to pay the filing fee to make amendments to your bankruptcy petition should anything change during the course of your bankruptcy or if you make any mistakes on the petition itself.

Up until now I’ve cover the costs for filing pro se, which means you handle your bankruptcy case yourself without a lawyer. However, you may decide that your situation warrants hiring an attorney, in which case, you should expect to spend around $1000 in attorney’s fees.

There may be any number of other costs associated with your bankruptcy, especially if your situation is more complicated than most. It’s always a good idea to consult with an attorney in order to determine what the best course of action should be.

The Downside of Bankruptcy

Bankruptcy also has its downside, both for the consumer and for American businesses. There’s no doubt that while credit card companies and financial institutions reap huge rewards from consumers spending on credit, they also stand to lose if too many consumers cannot pay back those credit obligations. Additionally, for the American consumer, bankruptcy can be a difficult process, both financially, emotionally, and in terms of your credit.

There is also a certain stigma attached to bankruptcy that can make it difficult for a consumer to acquire credit for car loan, a home loan or a small business loan, and, quite frankly, it can be downright embarrassing to have to admit to your family and friends. Although your credit can recover even to excellent levels within years of a discharge bankruptcy, for a period of time after filing, you will find it difficult, if not impossible, to get good rates on home or car loans. You will also find it very difficult to get a credit card at all, however, there are a number of options available to you to help you improve your credit and regain an excellent credit score within a few years.

The new bankruptcy law as of 2005

in 2005, Congress passed a law that change the way bankruptcy works and, in fact, made it more difficult for some consumers to file Chapter 7 bankruptcy. This law is designed to prevent bankruptcy abuse and is called the bankruptcy abuse prevention and consumer protection act (BAPCPA).

The biggest change the new law implemented was the creation of something called the “means test,” which is a questionnaire that helps the bankruptcy courts to determine if an individual should be allowed to proceed with a Chapter 7 bankruptcy based on the amount of his or her disposable income.

Those filers with higher incomes may fail the test and be forced into Chapter 13 bankruptcy, or out of bankruptcy altogether. However, in practice, most consumers who file for Chapter 7 bankruptcy do not have enough disposable income to fail the means test and as such you shouldn’t let this deter you. The one thing you should be aware of however, is that the new law does mean that filing for Chapter 7 bankruptcy is slightly more complicated than it used to be. If you on very little assets, the process should still be very simple for you, but could become more complicated if you own more assets such as a house or a car. You should consult with an attorney before filing bankruptcy to determine your best course of action.

So what is Chapter 7 bankruptcy?

Chapter 7 bankruptcy is designed to give you a completely fresh start, and is also called “liquidation.” He cancels most types of dead, however, depending on the amount of your personal assets, the bankruptcy trustee will have control and be able to sell any “non-exempt” assets you have in order to repay some of your debt obligations.

How Should You Feel About Bankruptcy?

I hope this website serves as your guide to chapter 7 bankruptcy. My goal is to help you understand how to complete a required bankruptcy paperwork, to understand what happens to your debts during bankruptcy, where you can get help with your bankruptcy, and how to pick up the financial pieces after your bankruptcy is over.

It may help you to understand, when filing Chapter 7 bankruptcy, that you’re not alone. Thousands of Americans every year file Chapter 7 bankruptcy for a variety of reasons. We covered some of those reasons in the previous article, but whatever the reason you are considering Chapter 7 bankruptcy, just know that it’s not the end of the world, it is possible to move on after bankruptcy, and in fact, it’s not terribly difficult to do so.

Why you shouldn’t feel guilty about Chapter 7 Bankruptcy

The American economy is based on consumer spending. It may surprise you to know that two thirds of the gross national product comes from consumer spending on goods and services we want or need. The importance of consumer spending to the health of our economy is evident when you consider the actions of both the Bush and Obama administration’s and handling economic downturns in 2001 and 2008 respectively. Both administrations urged American consumers to spend more money in order to stimulate the economy.

However, consumer spending has a dark side to it, and that too much consumer spending and too little savings can lead to poor health of our economy. The key is to balance consumer spending with the negative consequences that arise from too much consumer spending in order to maintain a healthy economy. However, this is not always easy to do and, like most things related to the economy, consumer spending and saving habits tend to swing up and down quite a bit and inversely proportional to the health of the economy.

In keeping with the trend to motivate consumers to spend, advertising often borders on the deceptive, and can lead consumers to spend far more money than would normally be appropriate. The United States is distinguished amongst countries as having some of the most effective advertising in the world. When people are making money and the economy is in good health this is a great thing and leads to more prosperity. However, in times of economic downturn, when everyone is pinching pennies, the highly effective advertising we are confronted with every day can be very damaging to your personal finances.

Readily Available Credit

If you or anyone you know has gone to college, you are probably aware of the heavy advertising and promotion credit card and loan companies do to try to acquire new customers immediately upon entering college. This readily available credit can easily cost us to live outside of our means and, when faced with such a spending culture from such a young age, Americans, perhaps more than any other society, have the odds stacked against them when it comes to consumer debt.

Billion-Dollar Bailouts for Poorly Managed Financial Institutions

When huge companies like AIG, Bank of America, and Lehman Brothers are being bailed out of their financial difficulties by the US government, one can’t help but to wonder why the individual American consumer is left to fend for him or herself.

Because of the apparent contradiction that exists in our society of encouraging more and more consumer spending, all the while knowing that sometimes the spending leads to uncontrollable levels of debt, our system affords consumers the right to declare bankruptcy and get a fresh start. Bankruptcy is a way to put power into the hands of the little guy, the individual American consumer.

A Great Chapter 7 Bankruptcy Resource

If you’re reading this you’ve decided to either file Chapter 7 bankruptcy or to at least consider the possibility. One book that has been invaluable in guiding me through my own Chapter 7 bankruptcy was the NOLO book entitled “How to file for Chapter 7 bankruptcy”.

Here’s a brief rundown of some of the topics covered in that book:

• How this chapter 7 bankruptcy work?
• am I eligible to file for Chapter 7?
• Is my income low enough to qualify for Chapter 7?
• Does it make sense for me to use Chapter 7?
• Do I have options other than filing for bankruptcy?
• Can I avoid being evicted by filing for bankruptcy?
• Does bankruptcy stop my creditors from trying to collect what I owe them?
• what will happen to my car if I file?
• What will happen to my house if I file?
• What personal property might I lose my file?
• Can I keep property that pledged as collateral for a debt?
• should I sign a reaffirmation agreement promising to repay a debt even after I file for bankruptcy?
• Will I lose my retirement account or pension?
• Where can I get credit counseling required by the new bankruptcy law?
• Where can I get the budget counseling required by the new bankruptcy law?
• Can I get my student loans canceled or reduced in bankruptcy?
• Is there a way I can keep valuable property when I file for Chapter 7?
• Which debts will be wiped out after my bankruptcy?
• Which debts will I still have to pay after my bankruptcy?
• can I get my taxes wiped out in bankruptcy?
• How will my bankruptcy affect someone who cosigned for one of my debts?
• what will happen if I forget to list the debt on my bankruptcy papers?
• Can I give a property away to friends or relatives to avoid losing it in bankruptcy?
• How will bankruptcy affect my child support obligations?
• How I fill out the bankruptcy forms?
• How do I file my bankruptcy forms?
• What happens at the meeting of creditors?
• What documents do I need to bring to the creditors meeting?
• Can I change my bankruptcy papers once I file them?
• Y. need an attorney to handle my bankruptcy?
• how can I find a bankruptcy lawyer?
• If I can’t afford a lawyer, what other types of help are available to me?
• Cannot be fired because I filed for bankruptcy?
• How can I rebuild my credit after bankruptcy?

Even brand-new NOLO booked only cost $29.99, so it’s a tiny investment that will undoubtedly help you more comfortably navigate the waters of Chapter 7 bankruptcy.