One of the many reasons people avoid filing for bankruptcy is simply because they’re not aware of the process and what it involves. It can be complex and require a strong attention to detail. But this doesn’t mean you should shy away from bankruptcy as you seek a way to improve your finances.
What is Chapter 7 Bankruptcy?
Chapter 7 bankruptcy is one of a handful of available options for those filing for bankruptcy. It forgives most unsecured debts, such as credit card debt, medical bills, and personal loans. It’s also the fastest and most common type of bankruptcy.
It’s important to know you may have to give up some assets and it will leave a mark on your credit report for at least 10 years. All in all, you can complete the process of Chapter 7 bankruptcy within six months. In order to get started, the first step is to complete credit counseling. You must do this with an approved agency and you will receive a credit counseling certificate proving so.
Now is a good time to seek the help of an experienced bankruptcy attorney. It’s worth it to have an expert help you with paperwork and other associated documents because missing or incomplete paperwork could disqualify you from being eligible for Chapter 7 bankruptcy.
The next step is to file your petition and other paperwork for bankruptcy. You will need relevant documentation of your income, debts, and assets. An automatic stay will go in effect when you file your petition, keeping creditors from taking collection actions against you.
The court will appoint a bankruptcy trustee to begin managing the process once your petition is officially filed. The trustee will meet with you, your creditors and your lawyer to discuss your bankruptcy forms and finances. If you fail to appear for this meeting of creditors, your bankruptcy case will most likely be dismissed.
The trustee will also confirm whether you are eligible for Chapter 7 bankruptcy. In order to qualify you:
- Need to pass the means test. It looks at your expenses, income, and assets.
- Cannot have already completed a Chapter 7 bankruptcy in the last eight years. You also cannot have completed a Chapter 13 bankruptcy within the last six years.
- Cannot have a filed bankruptcy petition within the last 180 days dismissed because you did not appear in court or follow court orders, or because you chose to dismiss your filing
What’s Next for Chapter 7 Bankruptcy?
Once you’re officially qualified, your trustee will determine which of your assets that are not exempt are worth selling. The proceeds of these assets would go to your creditors. The non-exempt property includes things like jewelry or equity in your car or house.
Most Chapter 7 cases are ones where there aren’t any nonexempt items to liquidate. Your secured debts will be taken care of next. The property held as collateral may be returned to your creditor(s). Other options include redeeming the collateral — pay what it’s worth now — or reaffirming the debt — exclude it from bankruptcy and pay it back as scheduled.
Before your bankruptcy case is discharged you will have to complete a financial education course. Again, this must be from a qualified nonprofit credit counseling agency. Then, your case will be discharged and your eligible debts are forgiven.
Chapter 7 bankruptcy is a great tool for many struggling financially. Before filing, it’s important to determine if it’s right for you. The help of a qualified bankruptcy attorney will go a long way in making the process easy and successful.
Contact Our Cherry Hill NJ Bankruptcy Attorney for a Free Chapter 7 Consultation
If you’re struggling with debt, you may need a fresh start financially. An experienced bankruptcy and debt relief attorney can help you explore your options and determine the best course of action for you, your family, and/or your business. The experienced New Jersey bankruptcy lawyers at the Law Office of Joel Spivack understand the nuances of New Jersey and federal bankruptcy laws, so we can help you protect your interests.
Call us anytime at (856) 488-1200 or fill out the online contact form to schedule a confidential consultation. We have an office conveniently located at 1415 Marlton Pike East, Suite 302, Cherry Hill, NJ 08034.
The articles on this blog are for informative purposes only and are no substitute for legal advice or an attorney-client relationship. If you are seeking legal advice, please contact our law firm directly.