Getting a Fresh Start with a Chapter 7 Bankruptcy

ou can think of a chapter 7 bankruptcy as a fresh start with a life not overburdened with unmanageable debt. The chapter 7 was designed just for the individual debtor and is used to discharge certain eligible debts. When the court discharges the debt it means you no longer have any responsibility for the liability. Not all debts can be included in this type of bankruptcy filing, but for many people that don’t have any of the exempted debts, this bankruptcy literally allows them to start with a clean debt slate.

The chapter 7 bankruptcy should be handled by an attorney who is a specialist. Though the chapter 7 filing is one of the less complicated filings in many cases, there are still specific and complex laws governing how the process will be handled. The reason it can be less complicated is only because many people filing a chapter 7 are dealing with the normal types of debt such as mortgages, credit cards and past due taxes. Of course, this doesn’t hold true for everyone, but for many people the chapter 7 filing turns into a fairly simple process.

But even in the simple cases, the right forms must be filed and the laws followed. For example, the bankruptcy attorney must submit a petition to the court requesting the bankruptcy along with certain financial schedules detailing your income and expenses. The court is also given a copy of several years’ worth of tax returns.

When you and your bankruptcy attorney decide to file a chapter 7 bankruptcy, you have to complete a credit counseling course. In most cases, you can complete an online course now which makes it very easy to fulfill the court requirements. There are some filing fees which must be paid to the court also, but if you can’t afford the fees, the attorney can ask the courts to allow you to pay the fees in installments.

Under the chapter 7 bankruptcy laws there are certain assets which are considered exempt property. In fact, individual states are allowed to define this exempt property too, so your attorney can pick the most lenient definitions which will give you the most relief. This is why you need an experienced bankruptcy attorney.

When the bankruptcy is filed, you will find that the debt collection efforts stop quickly. In legal terms, this is called an automatic stay and it stops telephone calls, garnishments, levies, lawsuit filings and so on. This is another reason why it is critical that you list every single creditor in your life on your financial schedule. Even if you are not sure you owe the debt, it should be listed to prevent future collection efforts.

The court is going to appoint a trustee to handle your filing. The trustee will hold a creditor’s meeting which gives your debtors the opportunity to explain why they do not believe the debt owed to them should be discharged. The trustee can also ask you questions about anything you included on your financial statements.

A chapter 7 bankruptcy is a way for people unable to pay their debt to clear the slate and start fresh. It is a major decision to file bankruptcy, but this is a decision that can give you the opportunity to start a new long term financial life.