Filing for chapter 7 bankruptcy provides relief to the debtor of any amount of debt owed and does not involve filing a repayment plan as in Chapter 13 or Chapter 11 bankruptcy. The debtors’ non-exempt assets are liquidated by a trustee and the funds are distributed to pay the creditors. (For many or most debtors all of their property will be protected.) Under the Bankruptcy code, the debtor is able to keep certain exempt property. Upon filing for chapter 7 the debtor’s property may be subject to liens or may be lost. Before filing for chapter 7 you must pass a “means test” to prove your inability to pay your unsecured debt like credit cards and medical bills.
Who is eligible to file for Chapter 7 Bankruptcy?
The debtor may be an individual or a business entity such as a partnership or corporation to qualify to file for chapter 7 bankruptcy.
Individuals who have had a bankruptcy petition dismissed within the last 180 days due to the debtor’s willful non-compliance do not qualify to file. Further, any individual who has had a previous chapter 7 discharge within 8 years will not qualify for a discharge in a new case.
Individuals who do qualify are given a fresh start as chapter 7 cases usually result in a discharge of debts, this however does not apply to partnerships or corporations (Although, in some cases there may still be benefits to corporations to file.)
Chapter 7 Bankruptcy Process
Step1: Determine Your Eligibility
Your eligibility to file your case is determined by the points we mentioned above. If you’re uncertain if you qualify you may find it helpful to speak with a bankruptcy attorney.
Step 2: Take the Credit Counseling Course
Before you file, you must take a credit counseling course. It needs to be completed within a 180 day window of filing your case and the court won’t accept your filing without proof showing you took the course. If you already took it, but the course certificate has expired, you just have to retake the course.
Step 3: File a Chapter 7 Petition
File a chapter 7 petition in the area where you reside or where the organization has its principal place of conducting business or has its assets. In your schedules of assets and liabilities, you are testifying that you have listed all of your assets and liabilities. Failure to do so may be considered a felony, so be certain you are including absolutely everything. Make sure that you choose the right exemptions and the correct scheme so that you can protect all of your assets or as much as possible, it is best to speak with an attorney.
Step 4: Pay the Filing Fee
Upon filing you will need to pay a court filing fee of $338. This number is subject to change and increases periodically. Arrangements can be made with the court’s permission for individuals that require time to pay in instalments.
Step 5: Trustee Meets with Creditors
20- 40 days after filing your case, your trustee will hold a meeting with the creditors. You will be placed under oath and you must attend in order to answer any questions the Trustee and any creditors have regarding your financial affairs and assets.
Sept 6: Chapter 7 Discharge is Granted
In most cases, individual debtors are released from personal liability from debts within 60 days after the date of meeting with creditors. Chapter 7 discharge is subject to some exemptions so it’s best to obtain legal counsel to discuss the scope of the discharge and what occurs if a creditor files a complaint objecting to the discharge.
Chapter 7 Timeline
Most cases usually take about 3 – 4 months from filing to discharge. The length of time can vary based on the degree of complexity of the case and the financial situation, as well as the promptness of the debtor to provide all the information needed in each step.
Working with a Bankruptcy Attorney
Before embarking on the process, it’s always wise to consult an attorney to assess your options and to discuss both positive and negative outcomes.
Filing for chapter 7 bankruptcy is one of several options an individual has when facing unmanageable unsecured debt. Knowing which choices are right for you can be confusing, that’s why consulting with an attorney to assess your current situation and to understand impacts those decisions will create for the future is a good first step to take. Whatever your situation, the experienced bankruptcy lawyers of Lynnwood & Snohomish County are here to help you achieve the best possible outcome for your particular situation.
Contact Bankruptcy Lawyers Serving Lynnwood & Snohomish County Today
Steven Palmer of Curtis, Casteel & Palmer, PLLC is here to help you every step of the way in assessing your eligibility and applying for chapter 7 bankruptcy. Speak with a Bankruptcy Lawyer today to start your filing process.
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