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More About Chapter 7 Bankruptcy...
Chapter 7 bankruptcy: It's supposed to be the simplest and quickest way to file. Is it the best type of bankruptcy for you? After all, even if you've got to be in bankruptcy, you still want the best deal you can get to put your finances in order.
The Bankruptcy Abuse Prevention and Consumer Protection Act signed into law in April 2005 made some changes to the Bankruptcy Code. If a friend has told you about how they filed for bankruptcy before 2005, your experience will be somewhat different.
In order to file for any chapter of bankruptcy today, you have to have attended a credit counseling course from an approved credit counseling agency within the last six months. There are exceptions for emergencies or if it's determined by the trustee that a course is was not readily available. Any debt management plan made during the course must be filed with the court.
Once you have the credit counseling out of the way, you have to determine if you are eligible for chapter 7 bankruptcy. If your currently monthly income (your average monthly income for the past six months) is more than your state's median income, you have to do a means test calculation to determine your eligibility. You can find the state median income at the U.S. Trustee website at www.usdoj.gov/ust, or check with a bankruptcy attorney. Information about the means test is given in another section.
Once you have determined you are eligible for chapter 7 bankruptcy and filled out the proper forms, your documents are filed with the Bankruptcy count. There is an immediate stay granted so that creditors are prevented from taking action, your wages cannot be garnished, and any legal actions being taken against you by your creditors are halted. Within two weeks, the bankruptcy court has advised your creditors that a petition for bankruptcy has been filed.
About 20 to 30 days after filing, the trustee will begin selling your nonexempt assets. Between 20 and 40 days after your petition is filed, your trustee will schedule a meeting of your creditors. This is often called a '341 meeting' because section 341 of the Bankruptcy Code requires you to meet with your creditors.
The 341 is usually a brief meeting where you are asked about your paperwork and if you have destroyed your credit cards. The trustee will also ask if you are sure of the effects of being in bankruptcy. Your creditors usually do not even attend.
After the 341 meeting you have 30 days to reaffirm your debts on secured property (a car, for instance). Basically, this means you say you are going to keep making payments. If you do not pay for the property or reaffirm the debt within the time specified, the creditor is allowed to repossess the asset or take whatever action they are allowed under the law.
Usually, within 60 to 90 days after your 341, the bankruptcy is completed and almost all debts are written off.
Since it is a serious step that can affect you for several years, you should investigate bankruptcy alternatives before you file. Finding out what bankruptcy involves and what it would mean for you will help you ask and understand questions when you consult a competent financial advisory or bankruptcy attorney.
Since it is a serious step that can affect you for several years, you should investigate bankruptcy alternatives before you file. Finding out what bankruptcy involves and what it would mean for you will help you ask and understand questions when you consult a competent financial advisory or bankruptcy attorney.
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