Chapter 7 Bankruptcy

Chapter 7 Bankruptcy is the type of bankruptcy that most people think of when they hear the word bankruptcy. In Chapter 7 bankruptcy, also known as “liquidation bankruptcy,” the debtor’s assets, except those exempted under state law, are used to pay off their debt. Under Chapter 7, all of the debtor’s unsecured debts are discharged and wiped out, with the exception of most student loans and some tax debts.

The Supreme Court of the United States stated, “bankruptcy (was) designed to relieve the honest debtor from the weight of indebtedness which has become oppressive and to permit him to have a fresh start in … life, freed from the obligation and responsibilities which may have resulted from … misfortunes.” This “fresh start” allows hundreds of thousands of Americans to live without the fear and anxiety of living paycheck to paycheck.

Chapter 7 Bankruptcy: The Process

Initial Consultation – At this meeting, your financial situation is examined. Most, if not all, of the options available to debtors are presented at this meeting. If it is agreed that a Chapter 7 bankruptcy is most appropriate, you retain an attorney as your legal representation in this matter. You will be given paperwork to fill our and a list of documents that will be needed to proceed toward filing your bankruptcy case. In addition, you will be given paperwork to fill out and a list of documents (such as tax returns, pay stubs, etc.) needed for this process.

Bring Back – Usually within a week of the initial consultation, you will come to a “bring back” meeting. During this meeting, our staff will review your paperwork with you to ensure that we have all of the necessary information to prepare your case.

Signing – At this meeting you will review all of the documents and sign the petition. This is the document that will then be filed with the court.

Filing – After the signing meeting, we will file your case and send notice to all of your creditors. Depending on the urgency of your case and your work schedule, getting to this point will usually take between two days and several weeks.

341 meeting – Between 30 to 50 days after your case is filed, there is a meeting called the 341 meeting or meeting of creditors.

Discharge -You will receive your discharge about two to three months after the 341 meeting. This is the last step in the bankruptcy process. At that point, you do not owe any of the unsecured creditors that were discharged in the Chapter 7 bankruptcy.