What is Chapter 7 Bankruptcy?
In Chapter 7 Bankruptcy you are seeking to discharge, (wipe out), of all your debts without the necessity of having to make payments on a monthly basis. Your case is filed and completed in approximately ninety days from the date it is filed. Chapter 7 is filed when there is no money leftover to pay creditors like your credit cards each month. You may file for Chapter 7 bankruptcy every eight years which is measured from the date the earlier case was filed.
In a Chapter 7 case you can, usually, sign a reaffirmation agreement and continue to pay for a car loan or a mortgage on their home. This agreement is in place because the Bankruptcy Code permits a debtor to elect to retain some property, and continue to make payments on it. There is another Code provision that allows you to redeem the property by paying the creditor fair market value in exchange for the debt being discharged.
What is a Chapter 13 bankruptcy?
A Chapter 13 bankruptcy means you will make payments on a monthly basis for up to sixty months to a case administrator known as a Trustee. This is the bankruptcy you file when you either you want to make up arrearages on your home and stop a foreclosure, do not qualify for Chapter 7, or you have priority debts like the IRS, child support, etc. that cannot be eliminated under Chapter 7 bankruptcy. Your attorney may advise you to do a Chapter 13 if you have IRS taxes, child support or alimony arrearages, or other non dischargeable debt.
A Chapter 13 is often used to keep your home where you are behind on your mortgage and the creditor has filed, or is threatening to file, a foreclosure action. This allows you to make up the missed payments over a period of 36 to 60 months while resuming your normal monthly payment.
How do I file for Bankruptcy?
Steve Vidmer and his staff will prepare a “Voluntary Petition” and supporting schedules based on your information. This will be filed electronically with the Bankruptcy Court and a date will be set for you to attend what is called the Section 341 Meeting of Creditors. Immediately upon filing your case the “automatic stay” goes into effect. This is an injunction that stops your creditors from taking any further collection actions including telephone calls, garnishments, lawsuits and foreclosure sales.
What is the “341" Meeting of Creditors and what will happen at the meeting?
The Meeting of Creditors is a meeting required by the bankruptcy laws. It will be conducted by the trustee assigned to your case who will ask you a series of questions. It also gives creditors an opportunity to ask you questions, but creditors rarely show at the meeting.
The meeting usually takes five to 10 minutes and is fairly informal.
Will I lose all of my stuff? What are exemptions?
When you file bankruptcy almost everything you own goes into a “pot” called the Bankruptcy Estate. The trustee assigned to your case can sell these assets and pay part or all of the debt you owe. Exemptions allow you to take assets out of the “pot” and keep them. Kentucky uses the Federal Exemptions” and they are fairly liberal in what they allow you to keep. Typically most of my clients in the past have been able to keep all of their property, both real and personal. Of course, if there is a lien or mortgage on the property and you want to keep it you must continue to make the payments and reaffirm the debt.
When will I receive my discharge?
In most Chapter 7 cases you will receive your discharge 60 days after the date first set for your Section 341 Meeting. In Chapter 13 cases you will receive your discharge upon successful completion of your Chapter 13 plan.
Please keep in mind the above is not legal advice and no attorney client relationship is formed. The information was correct at the time it was produced but may have changed by the time your are reading it.
Can credit card and medical debts be discharged?
Under most circumstances - yes. Many people tell me they thought the “new” bankruptcy laws did away with discharge of credit card debt. This is not the case.
Can student loans be discharged?
Only in very limited circumstances.
Will my name be published in the paper if I file?
Bankruptcy filings are public record but as of now, newspapers in our area do not publish the names of those who have filed.
The above is for informational purposes only and is not given as legal advice. The information was current at the time it was published but may well change by the time you are reading it. No attorney client relationship is created by anything contained on this site.
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