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Chapter 7 Bankruptcy Explained

A Chapter 7 Bankruptcy is also referred to as a straight bankruptcy. This is one of two types of bankruptcy an individual can file for. In this type of bankruptcy, you make a court appearance where you request that the judge relieves you of your unsecured debt. Once you have filed for this type of bankruptcy you will still have to keep making car payments if you intend to keep your card.

The entire Chapter 7 Bankruptcy process lasts approximately 180 days. You will most likely qualify for this type of bankruptcy if you make a low income and are on a fixed income. While going through the process of the bankruptcy, you will have to work with a trustee who will take your money every month and use that company to pay your creditors. The court will appoint your trustee and you will have no choice but to work with the person.

During the process you will have to go to a creditor's meeting. This is called a 341 meeting and it will require you to speak under oath. Once this initial meeting has been completed, your trustee will automatically take control of any assets that you have that are not exempt from the bankruptcy claim. The trustee then sells off your assets and applies that money towards paying off your debts. Your trustee will have the option of reviewing the income you make and determining how much money you need per month to pay for your essentials.

After your bankruptcy case has started the wages that you earn will be yours to keep and your creditors cannot take that money from you. Within the first 60 days after your case has started, either your trustee or any of your creditors have the option of challenging whether or not you have a right to have your debt discharged.

Once you are involved in a bankruptcy case you will be required to take and successfully complete a financial education course. The course you take must be approved before you will be able to discharge your debts. You can take one of these classes online and the average class lasts only a few hours. If you do not complete this class and receive a certificate of completion for it your bankruptcy case may be closed and you will still be responsible for paying off your debts. To reopen the case at a later date, it is likely that you will have to pay a fee, file your certificate and then enter your debt discharge for viewing by the court.

You can generally have your debt discharged within a period of four months to six months after your initial filing. These discharges are available to indiviudal citizens only. Neither partnerships nor corporations can have their bankruptcy discharged. These are the most important things you need to know when it comes to filing for Chapter 7 Bankruptcy. This is the most common type of bankruptcy for individuals.