Bankruptcy Chapter 7 - The Liquidation Chapter
A law that provides for the development of a plan that allows a
debtor, who is unable to pay his creditors, to resolve his debts
through the division of his assets among his creditors is called
Bankruptcy. This supervised division also allows the interests
of all creditors to be treated with some measure of equality.
Certain bankruptcy proceedings allow a debtor to stay in
business and use revenue generated to resolve his or her debts.
The new bankruptcy law is now in effect, the landscape has
changed for those who are considering bankruptcy. All debtors
will have to get credit counseling before they can file a
bankruptcy case and additional counseling on budgeting and debt
management before their debts can be wiped out. Some filers with
higher incomes won't be allowed to use Chapter 7.
What is chapter 7 of the Bankruptcy Law?
The most frequently used bankruptcy law is the Chapter 7, often
called the Liquidation Bankruptcy. It involves the complete
liquidation of a debtor's property, with the proceeds used to
pay off the debts. Someone who considers bankruptcy is unaware
of the nuances of bankruptcy or certain creditors' rights in
bankruptcy. Be familiar with all the applications for filling.
This article will provide you with broad guidelines so that you
may be comfortable with your decision. I will begin with an
outline of basic procedures in Chapter 7 case and conclude with
a discussion of various Chapter 7 pitfalls.
7 Basic procedures involved in filing for a chapter 7:
1. You will be required to file a sworn upon filing, this
includes a schedule of assets and liabilities, a list of exempt
property, a schedule of current income and expenditures, a
statement of your financial affairs and a statement of intent
regarding consumer debts secured by property of the estate. You
will surrender all your property state to the trustee. What this
means, among other things, is that an automatic stay is
triggered, prohibiting creditors from pursuing you or your
property outside of the bankruptcy proceeding.
2. The clerk of court will give notice of the bankruptcy to your
creditors.
3. Meeting of creditors will be held to question you about your
debts and ability to pay. You will be attending the meeting
whether you like it or not. The judge may not question you at
this time. Other creditors and the trustee may question you.
Unlike a trial, your attorney may not "object" to questions in a
formal sense. It is an open opportunity for creditors to
question you and you are required to respond in good faith.
4. A creditor of the trustee assigned to your case may object to
your listed exemptions within 30 days after the meeting of
creditors.
5. After the first date set for the meeting of creditors, A
creditor must file a proof of claim within 90 days. If a surplus
remains after all of the claims are paid in full at the end of
the case, the court may grant an extension of time for filing of
claims not filed during the initial 90 day period.
6. An objection to your receiving a general discharge of all of
your debts must be filed by the trustee or a creditor within 60
days following the first date set for the creditors meeting If
no objections are filed, and if no motion to dismiss is pending,
the court will ordinarily grant a discharge upon expiration of
the 60 day period.
7. A creditor may object to the discharge ability of a
particular debt at any time if the debt if it:
* Is for a tax or customs duty * Is not listed in the schedules
so that a creditor could file a proof of claim * Is related to
alimony or child support * Is a government fine or penalty; or
is a government insured student loan.
A creditor may object to the discharge ability of a particular
debt only within 60 days of the first date set for the meeting
of creditors, if the debt is a consumer debt created close to
filing or is a result of fraud or is a result of a wilful and
malicious injury to a person or property of another.