Chapter 7 Bankruptcy FAQ
How much will it cost
A typical Chapter 7 bankruptcy will cost you $335 for court filing fees (attorney fees are separate) and usually are done in just one court visit.
You will also have to complete a credit counseling course with an agency that is approved by the United States Trustee, For a list of approved agencies, go to the trustee’s website www.justice.gov/ust, and click “Credit Counseling and Debtor Education.”, or you can ask your attorney to recommend a course for you.
Who can file?
You won’t be able to use Chapter 7 bankruptcy if you already received a bankruptcy discharge in the last six to eight years (depending which type of bankruptcy you filed) or if, based on your income, expenses, and debt burden, you could feasibly complete a Chapter 13 repayment plan.
Your attorney can evaluate your situation and recommend the correct course of action for your situation.
What is “Automatic Stay”?
When you file for Chapter 7 bankruptcy an “automatic stay” goes into effect. This “automatic stay” automatically stops most creditors and debt collectors from trying to collect what you owe them. While not a permanent solution, this stay goes into effect for the duration of the court filing, giving you temporary relief from creditors trying to garnish your wages, bank account, or other assets.
The only thing that can stop creditors in a permanent way is to complete your filing and have your Chapter 7 bankruptcy approved. You should always consult with an attorney first.
Can I go on a shopping spree before I file for bankruptcy?
No, no, no. This is a fraud, and you will go to jail for it. Chapter 7 bankruptcy was designed to help individuals recover from bad situations, not to help them go shopping for one last time. The Trustee and the creditors will look at and check all your credit cards, loans, and bank statements for unusual activity and hold you accountable for it.
Can I just give my assets to friends or family?
Again, this is a fraud, and you can go to jail for this. Trying to hide cash or objects such as cars, motorcycles, or other assets is a criminal offense. You cannot sell your motorcycle to your brother for $100 when it’s worth $10K. Do not do this!
The Bankruptcy Court controls all your financial affairs
The moment you file for bankruptcy, regardless if it’s Charter 7 or Chapter 13, the court takes charge of everything you owe and own. You are forbidden from selling, gifting, or putting up as collateral anything you own without the courts express written consent.
What is “The Creditors Meeting”?
After a couple of weeks of your initial filing, you and all the creditors listed in your bankruptcy filing will receive a notice that a “creditors meeting” has been scheduled. The bankruptcy trustee holds the meeting and will swear you in. The trustee will ask you about your bankruptcy and about the paperwork that you filed. This is usually the last time you will be in court.
What happens to your property?
If after the “creditors meeting” the trustee determines that you have nonexempt property, you may be required to surrender the property or to provide the court with the equivalent cash value. Your attorney can tell you what property is or is not exempt. This is especially important since what is exempt and how much varies from state to state.
What about my car(s)?
This question is best answered by your attorney. The answer is complicated and again varies from state to state. It also depends on how much, if any, the equity you have in the vehicle. Usually, if your payments are up to date, you will be allowed to keep at least one vehicle.
Do I still have to pay child support, my student loans, and tax debts?
Yes, you do. These debts, unless the court rules otherwise, are rarely if ever forgiven. Please consult with your attorney.
The Chapter 7 Bankruptcy Discharge
At the end of the process, your debts are wiped out (discharged) by the court and you are ready for a fresh start in your life.
Get Your Free Case Evaluation
Most initial bankruptcy consultations are given by Juan Burgos and are free of charge. Juan has made it his life mission to educate his clients about their rights under the law and in doing so help people get back on their feet and help them achieve the American dream.