Filing for Chapter 7 bankruptcy can provide a fresh start to those debtors who are unable to pay their consumer debts. Deciding to file for Chapter 7 bankruptcy is a major decision that can result in a discharge of any unsecured debts through the liquidation of assets, in some cases.
Filing for Chapter 7 bankruptcy requires filling out certain forms completely and accurately, as well as passing a means test and attending a meeting of creditors. Ensuring accuracy when disclosing your assets is important to avoid looking as if you are hiding other assets. The general process described below is what you can expect if you decide to file for Chapter 7 bankruptcy in 2021. Consulting with a bankruptcy attorney can further help you understand the Chapter 7 process and what to expect.
Before you file for Chapter 7 bankruptcy, you will be required to complete a mandatory credit counseling meeting. This meeting requires you to discuss your finances with a credit counselor to determine if you can pay off your debts without filing for bankruptcy, and it must be completed within 180 days before you file. This course can be completed over the phone or online. The counselor may be able to show you other options alternative to filing for bankruptcy, such as consolidating debts, or will advise that filing is the best course of action for you. When you do decide to file, you must prove that you have completed credit counseling.
Filing for Chapter 7 bankruptcy first requires that you pass the means test. The means test ensures that you do not have the disposable income to pay off your debts. If you make less than the state median income for a family of your size, you pass the means test. However, if you make more than the state median income for a family of your size, you would have to provide a detailed report of your income and expenses to show that, even though your income is higher than that of the state median, you still do not have the amount of income required to pay your debts.
You will be required to fill out bankruptcy forms that can be found online. These forms will require you to disclose your assets and debts, as well as claims for property exempt from liquidation. Upon filing, you will be appointed a bankruptcy trustee who will oversee your case.
The meeting of creditors, also known as a 341 meeting, usually takes place between 21 and 40 days after you file for bankruptcy. It will take place at the courthouse, and your attendance is required. During the pandemic, remote hearings have been held. At the meeting, you will be sworn in by the Trustee, and he or she will ask you questions regarding your assets and finances, which you will answer under oath. Additionally, while creditors aren’t required to attend, they may do so and ask you questions regarding the nature and location of your assets. It is important to be mindful of your answers as they can be used as evidence in a case against you in which a creditor objects to discharge.
After your meeting, you will surrender any non-exempt property, which will be sold to pay your creditors, and your unsecured debts will be discharged. In many cases, your assets can be completed exempted which means the trustee would not sell any of your property. Chapter 7 bankruptcy is a powerful process with many benefits, but it also carries risks to your interests and assets if done incorrectly.
If you are ready to file for Chapter 7 bankruptcy, contact the bankruptcy attorneys at Miranda, Magden & Miranda, LLP. Our skilled bankruptcy attorneys will guide you through the process and help you to understand what property may be exempt from liquidation and the benefits and risks of the process. Visit our website to schedule a consultation with a bankruptcy attorney near you.
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