Bankruptcy Chapter 7

A chapter 7 bankruptcy seeks to immediately eliminate all dischargeable debts. This type of filing is commonly referred to as a liquidation or straight bankruptcy. Either an individual or a business can file bankruptcy under chapter 7.

For individuals, there is a means test that must be satisfied in order to qualify to file under chapter 7. If your income exceeds a certain amount, which is based on the median household income for the county in which you live, you may not be able to file under chapter 7.

Under a chapter 7 case, a bankruptcy trustee is charged with gathering and selling any non-exempt property you may own and using the proceeds from the sale to pay your creditors. This sounds much worse than it actually is and one of the attorneys will explain to you. Most states, including Nevada, have generous exemptions that allow most people to keep all of their personal property when filing under chapter 7.

Once you file your bankruptcy petition, an automatic stay immediately takes effect that requires your creditors to stop all collection efforts. After you have filed, you creditors are no longer allowed to make collection calls or send you demands for payment and all foreclosure and garnishment activities must stop immediately.

Within a month or so of filing under either chapter 7 or chapter 13, you will be required to attend a meeting of creditors where the bankruptcy trustee will ask you a series of questions concerning your finances. Your creditors can attend this meeting and ask questions as well. However, in personal bankruptcy cases, it is rare for creditors to appear at these meetings.

You can usually keep your home, cars, and other property on which you still owe money by entering into reaffirmation agreements with your creditors. If you enter into a reaffirmation agreement, the debt you reaffirm will not be discharged through the bankruptcy and you will be required to continue to make payments.

Unless there is some non-exempt property to be sold by the bankruptcy trustee, this is rare, a chapter 7 case can be usually concluded within four to five months of filing.

Filing bankruptcy is a very important decision that will have long lasting consequences. You should consult with a qualified attorney before making your decision.

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