If your financial situation is dour and you do not expect it to improve, you may want to consider a Chapter 7 bankruptcy. You’ll know you are experiencing difficulties when you begin to miss credit card, car note, house note and other payments. You also may begin to experience significant harassment by these creditors aimed at forcing you to pay. They may call you at all hours, inundate your mailbox with dunning notices and generally make your life miserable. Eventually, some might turn your debts over to collection agencies that may employ the same tactics only with more intensity.
A Chapter 7 bankruptcy is often referred to as “liquidation” and is a common form of “consumer” bankruptcy. It can generally wipe out the following types of balances:
*Credit card balances
*Utility bills
*Judgments obtained by unsecured creditors
*Debt from lines of credit
*Billings and invoices from healthcare organizations
*Personal unsecured loans
*Deficiency judgments (balance owed after a home foreclosure or car repossession)
You can file bankruptcy without a lawyer but the bankruptcy process is complex and will require you to understand and complete financial schedules and statements. In fact, a typical complete bankruptcy petition will run up to 50 pages. Also, Bankruptcy Code contains strict deadlines within which you must complete certain filings and tasks.
The Means Test
Usually, the first step is to consult with a bankruptcy attorney. Your attorney will explain the Means Test. The first part of this test is a comparison of your last six month’s income to the median income for your state. In Pennsylvania, currently it is $44,688 (single), $53,011 (two-person family),
$67,262 (three-person family) and $78,780 (four-person family).
If your income was less than that over the prior six month period, you will qualify for Chapter 7. If your income exceeds those levels, whether you qualify for relief under Chapter 7 will depend upon other factors.
Gathering Creditor Information
Once the means test is settled the bankruptcy attorney will gather your creditor information from your credit report and add them to your bankruptcy schedules so that they (your creditors) will receive a notice of your bankruptcy filing. By law, nearly all kinds of adverse creditor actions are immediately stayed.
The attorney will also record the amount you owe to each creditor. You will be asked to check your petition, schedules and related documents for accuracy and completeness.
Certain kinds of debt are not dischargeable. Tax obligations for which you have not filed a tax return and recently incurred taxes are usually not eligible for discharge in a Chapter 7 bankruptcy. Also, unless your federally guaranteed student loans impose an undue hardship, you will remain responsible for them after your bankruptcy case is closed.
After you are certain that all of the eligible debts are listed and your bankruptcy petition is complete and accurate, the attorney will file your bankruptcy case.
Asset Exemptions
In a Chapter 7 case, the trustee has the authority to liquidate assets and distribute the proceeds to your creditors according to the priority scheme set out in section 507 of the United States Bankruptcy Code. However, under section 522 of the Bankruptcy Code, most or all of your property can be kept from the reach of the trustee by the conscientious application of exemptions. Available exemptions vary from state to state but, typically, exemptions exist for your primary residence, automobile, household furnishings and other items.
Meeting of Creditors
Soon after you file your bankruptcy case, you will receive a notice for a meeting of creditors. This usually occurs within four to six weeks after the bankruptcy petition is completed. At the hearing, the trustee will ask you questions regarding your assets, income and other information contained in your bankruptcy petition. The trustee will report to the bankruptcy court regarding the information you provide during the meeting of creditors. For most consumer debtors, this is the only hearing they will attend in their bankruptcy case.
Contact Robleto Law now to find out more about the bankruptcy process and for an immediate, confidential consultation about your financial situation by calling the number at the top of the screen, or simply fill out our quick contact form.