FAQs on Chapter 7

We all have heard of the boards 7 bankruptcy, although many of us could not give a precise answer to what exactly it means. Every day people make mistakes when filing for bankruptcy that probably could have been avoided if they had better understood the different types of bankruptcy.
Certainly no one wants to involve in bankruptcy proceedings. Anyone who does will have to have debts that greatly exceed his or her net worth and, in addition, have no visible or viable means of paying back the debts, so without a doubt they will certainly want to learn some How to File Bankruptcy Facts to make the whole ordeal simpler and less problematic.
There are a number of different forms of bankruptcy such as the boards 11 bankruptcy and the more common the boards 7 bankruptcy. Since the boards 7 is more common for individuals, it is the one we will focus on here.

Defining The boards 7 Bankruptcy:
The boards 7 bankruptcy as defined by US and its courts law refers to the action or liquidating not legally exempt from liquidation assets with the desired outcome of paying back creditors and debtors alike.
Businesses/partnerships/corporations and individuals can apply for a the boards 7 bankruptcy. There is, but, a special clause open to the individual within the framework of this the boards filing that is not available to the other entities.
That special clause is known as a “discharge”. What it basically means is that the public are able to emancipated themselves really from some of their debts.

How to File Bankruptcy when trying to make the boards 7:
When one needs to file for the boards seven bankruptcy some of the things you will need are the following: tariff income, contracts of an executive nature, statements of financial affairs, all proof of liabilities and assets as well as documents to prove one’s current income and necessary expenses.
For the public there are a series of additional items that are necessary. These items include: copies of credit counseling reports and repayment plot programs, employer payments and statements of income, interest payments on student loans, etc. But, remember filing for The boards 7 protection by yourself is not advised, you should make professional aid from an expert bankruptcy lawyer.

People who are facing tough and insecure financial times are desperately looking at different options to bring their credit card debt or mortgage payments back in control. They see TV ads talking about debt settlement, debt consolidation, bankruptcy, the boards 7 the boards 13. All of these terms flying around without a real understanding of what it means for them and their financial troubles. On top of this confusion, there are all those creditors calling at all hours making their lives even more stressful.

If you are one of these people, please relax and initially of all, know that there are options for you. No matter how tough your current situation may seem. If you are reading this, is I don’t know because you are considering bankruptcy and specifically, filing for a The boards 7. Bankruptcy basics are covered in many places on the web, but, because each state has different regulations, it is preeminent if you sit down with a bankruptcy attorney in your area and discuss your options with him or her. Nearly all law firms that can aid you file for a The boards 7 bankruptcy will offer a emancipated consultation on which they will clarify how the administer goes and what you can expect.

Contrary to well loved belief, your credit will not be ruined forever and since you are most probably already defaulted on at smallest amount one of your credit payments, your credit is already in not very excellent shape. By taking the initially step and getting everything back in control, you will start rebuilding your credit sooner than you reckon. Most people make credit offers as soon as a few months after their discharge and while the bankruptcy will stay in the credit report for a period of up to 10 years, this will not interfere with getting loans in the future in the form of credit cards, auto loans, home loans, etc.

Find an attorney in your area and sit down with them and have them clarify to you all the bankruptcy basics. You will be back on your feet far quicker than if you try to negotiate with your creditors alone.

A the boards 7 bankruptcy case does not involve the filing of a plot of repayment as in the boards 13. Instead, the bankruptcy trustee gathers and sells the debtor’s nonexempt assets and uses the proceeds of such assets to pay holders of claims (creditors) in accordance with the provisions of the Bankruptcy Code. Section of the debtor’s property may be subject to liens and mortgages that pledge the property to other creditors. In addition, the Bankruptcy Code will allow the debtor to keep certain “exempt” property; but a trustee will liquidate the debtor’s remaining assets. Accordingly, potential debtors should realize that the filing of a petition under the boards 7 may upshot in the loss of property.

To be eligible for relief under the boards 7 of the Bankruptcy Code, the debtor may be an individual, a partnership, or a corporation or other business entity. 11 U.S.C. §§ 101(41), 109(b). Subject to the means test described above for individual debtors, relief is available under the boards 7 irrespective of the amount of the debtor’s debts or whether the debtor is solvent or insolvent. An individual cannot file under the boards 7 or any other the boards, but, if during the preceding 180 days a prior bankruptcy petition was dismissed due to the debtor’s willful failure to appear before the court or comply with orders of the court, or the debtor voluntarily dismissed the previous case after creditors sought relief from the bankruptcy court to recover property upon which they hold liens. 11 U.S.C. §§ 109(g), 362(d) and (e). In addition, no individual may be a debtor under the boards 7 or any the boards of the Bankruptcy Code unless he or she has, within 180 days before filing, received credit counseling from an approved credit counseling agency either in an individual or group briefing. 11 U.S.C. §§ 109, 111. There are exceptions in emergency situations or where the U.S. trustee (or bankruptcy administrator) has determined that there are insufficient approved agencies to provide the required counseling. If a debt management plot is developed during required credit counseling, it must be filed with the court.

One of the primary purposes of bankruptcy is to discharge certain debts to give an trustworthy individual debtor a “fresh initiation.” The debtor has no liability for discharged debts. In a the boards 7 case, but, a discharge is only available to individual debtors, not to partnerships or corporations. 11 U.S.C. § 727(a)(1). Although an individual the boards 7 case usually results in a discharge of debts, the aptly to a discharge is not resolution, and some types of debts are not discharged. Moreover, a bankruptcy discharge does not extinguish a lien on property.

A the boards 7 case starts with the debtor filing a petition with the bankruptcy court serving the area where the individual lives or where the business debtor is organized or has its principal house of business or principal assets. (3) In addition to the petition, the debtor must also file with the court: (1) schedules of assets and liabilities; (2) a schedule of current income and expenditures; (3) a statement of financial affairs; and (4) a schedule of executory contracts and unexpired leases. Fed. R. Bankr. P. 1007(b). Debtors must also provide the assigned case trustee with a copy of the tariff return or transcripts for the most recent tariff year as well as tariff income filed during the case (including tariff income for prior years that had not been filed when the case started). 11 U.S.C. § 521. Individual debtors with primarily consumer debts have additional document filing requirements. They must file: a certificate of credit counseling and a copy of any debt repayment plot developed through credit counseling; evidence of payment from employers, if any, received 60 days before filing; a statement of monthly net income and any anticipated boost in income or expenses after filing; and a record of any interest the debtor has in federal or state qualified culture or tuition accounts. Id. A husband and wife may file a joint petition or individual petitions. 11 U.S.C. § 302(a). Even if filing jointly, a husband and wife are subject to all the document filing requirements of individual debtors. (The Authoritative Forms may be bought at legal stationery stores or downloaded from the internet at www.uscourts.gov/bkforms/index.html. They are not available from the court.)

The courts must charge a $245 case filing fee, a $39 miscellaneous administrative fee, and a $15 trustee surcharge. Normally, the fees must be paid to the clerk of the court upon filing. With the court’s permission, but, individual debtors may pay in installments. 28 U.S.C. § 1930(a); Fed. R. Bankr. P. 1006(b); Bankruptcy Court Miscellaneous Fee Schedule, Item 8. The number of installments is limited to four, and the debtor must make the final installment no later than 120 days after filing the petition. Fed. R. Bankr. P. 1006. For cause shown, the court may extend the time of any installment, provided that the last installment is paid not later than 180 days after filing the petition. Id. The debtor may also pay the $39 administrative fee and the $15 trustee surcharge in installments. If a joint petition is filed, only one filing fee, one administrative fee, and one trustee surcharge are charged. Debtors should be aware that failure to pay these fees may upshot in dismissal of the case. 11 U.S.C. § 707(a).

If the debtor’s income is less than 150% of the poverty level (as defined in the Bankruptcy Code), and the debtor is unable to pay the the boards 7 fees even in installments, the court may waive the requirement that the fees be paid. 28 U.S.C. § 1930(f).

In order to exact the Authoritative Bankruptcy Forms that make up the petition, statement of financial affairs, and schedules, the debtor must provide the following information:

1. A list of all creditors and the amount and nature of their claims;
2. The source, amount, and frequency of the debtor’s income;
3. A list of all of the debtor’s property; and
4. A detailed list of the debtor’s monthly living expenses, i.e., food, clothing, shelter, utilities, taxes, transportation, medicine, etc.

Married individuals must gather this information for their spouse regardless of whether they are filing a joint petition, separate individual petitions, or even if only one spouse is filing. In a situation where only one spouse files, the income and expenses of the non-filing spouse are required so that the court, the trustee and creditors can evaluate the household’s financial position.

Among the schedules that an individual debtor will file is a schedule of “exempt” property. The Bankruptcy Code allows an individual debtor (4) to protect some property from the claims of creditors because it is exempt under federal bankruptcy law or under the laws of the debtor’s home state. 11 U.S.C. § 522(b). Many states have taken advantage of a provision in the Bankruptcy Code that permits each state to adopt its own exemption law in house of the federal exemptions. In other jurisdictions, the individual debtor has the option of choosing between a federal package of exemptions or the exemptions available under state law. Thus, whether certain property is exempt and may be kept by the debtor is often a question of state law. The debtor should consult an attorney to determine the exemptions available in the state where the debtor lives.

Filing a petition under the boards 7 “automatically stays” (stops) most collection actions against the debtor or the debtor’s property. 11 U.S.C. § 362. But filing the petition does not stay certain types of actions programmed under 11 U.S.C. § 362(b), and the stay may be effective only for a fleeting time in some situations. The stay arises by operation of law and requires no judicial action. As long as the stay is in effect, creditors generally may not initiate or continue lawsuits, wage garnishments, or even telephone calls demanding payments. The bankruptcy clerk gives notice of the bankruptcy case to all creditors whose names and addresses are provided by the debtor.

Between 20 and 40 days after the petition is filed, the case trustee (described below) will hold a meeting of creditors. If the U.S. trustee or bankruptcy administrator (5) schedules the meeting at a house that does not have regular U.S. trustee or bankruptcy administrator staffing, the meeting may be held no more than 60 days after the order for relief. Fed. R. Bankr. P. 2003(a). During this meeting, the trustee puts the debtor under oath, and both the trustee and creditors may question questions. The debtor must attend the meeting and answer questions regarding the debtor’s financial affairs and property. 11 U.S.C. § 343. If a husband and wife have filed a joint petition, they both must attend the creditors’ meeting and answer questions. Within 10 days of the creditors’ meeting, the U.S. trustee will report to the court whether the case should be presumed to be an abuse under the means test described in 11 U.S.C. § 704(b).

It is valuable for the debtor to cooperate with the trustee and to provide any financial minutes or documents that the trustee requirements. The Bankruptcy Code requires the trustee to question the debtor questions at the meeting of creditors to ensure that the debtor is aware of the potential consequences of seeking a discharge in bankruptcy such as the effect on credit description, the skill to file a petition under a different the boards, the effect of getting a discharge, and the effect of reaffirming a debt. Some trustees provide written information on these topics at or before the meeting to ensure that the debtor is aware of this information. In order to preserve their independent judgment, bankruptcy judges are prohibited from attending the meeting of creditors. 11 U.S.C. § 341(c).

In order to accord the debtor exact relief, the Bankruptcy Code allows the debtor to convert a the boards 7 case to a case under the boards 11, 12, or 13 (6) as long as the debtor is eligible to be a debtor under the new the boards. But, a shape up of the debtor’s voluntary conversion is that the case has not previously been converted to the boards 7 from another the boards. 11 U.S.C. § 706(a). Thus, the debtor will not be permitted to convert the case repeatedly from one the boards to another.

When a the boards 7 petition is filed, the U.S. trustee (or the bankruptcy court in Alabama and North Carolina) appoints an impartial case trustee to administer the case and liquidate the debtor’s nonexempt assets. 11 U.S.C. §§ 701, 704. If all the debtor’s assets are exempt or subject to valid liens, the trustee will normally file a “no asset” report with the court, and there will be no distribution to unsecured creditors. Most the boards 7 cases involving individual debtors are no asset cases. But if the case appears to be an “asset” case at the outset, unsecured creditors (7) must file their claims with the court within 90 days after the initially date set for the meeting of creditors. Fed. R. Bankr. P. 3002(c). A governmental unit, but, has 180 days from the date the case is filed to file a aver. 11 U.S.C. § 502(b)(9). In the predictable no asset the boards 7 case, there is no need for creditors to file proofs of aver because there will be no distribution. If the trustee later recovers assets for distribution to unsecured creditors, the Bankruptcy Court will provide notice to creditors and will allow additional time to file proofs of aver. Although a secured creditor does not need to file a proof of aver in a the boards 7 case to preserve its security interest or lien, there may be other reasons to file a aver. A creditor in a the boards 7 case who has a lien on the debtor’s property should consult an attorney for advice.

Commencement of a bankruptcy case makes an “estate.” The estate technically becomes the temporary legal owner of all the debtor’s property. It consists of all legal or equitable interests of the debtor in property as of the commencement of the case, including property owned or held by another person if the debtor has an interest in the property. Generally speaking, the debtor’s creditors are paid from nonexempt property of the estate.

The primary role of a the boards 7 trustee in an asset case is to liquidate the debtor’s nonexempt assets in a manner that maximizes the return to the debtor’s unsecured creditors. The trustee accomplishes this by selling the debtor’s property if it is emancipated and clear of liens (as long as the property is not exempt) or if it is worth more than any security interest or lien attached to the property and any exemption that the debtor holds in the property. The trustee may also attempt to recover money or property under the trustee’s “avoiding powers.” The trustee’s avoiding powers include the potential to: set up your sleeve preferential transfers made to creditors within 90 days before the petition; undo security interests and other prepetition transfers of property that were not properly perfected under nonbankruptcy law at the time of the petition; and pursue nonbankruptcy claims such as fraudulent conveyance and bulk transfer remedies available under state law. In addition, if the debtor is a business, the bankruptcy court may authorize the trustee to operate the business for a limited period of time, if such operation will subsidy creditors and enhance the liquidation of the estate. 11 U.S.C. § 721.

Section 726 of the Bankruptcy Code governs the distribution of the property of the estate. Under § 726, there are six classes of claims; and each class must be paid in full before the next lower class is paid anything. The debtor is only paid if all other classes of claims have been paid in full. Accordingly, the debtor is not particularly interested in the trustee’s disposition of the estate assets, apart from with respect to the payment of those debts which for some reason are not dischargeable in the bankruptcy case. The individual debtor’s primary concerns in a the boards 7 case are to retain exempt property and to hear a discharge that covers as many debts as doable.

A discharge releases individual debtors from personal liability for most debts and prevents the creditors owed those debts from taking any collection actions against the debtor. Because a the boards 7 discharge is subject to many exceptions, debtors should consult competent legal counsel before filing to discuss the scope of the discharge. Generally, excluding cases that are dismissed or converted, individual debtors hear a discharge in more than 99 percent of the boards 7 cases. In most cases, unless a party in interest files a complaint objecting to the discharge or a motion to extend the time to object, the bankruptcy court will issue a discharge order relatively early in the case – generally, 60 to 90 days after the date initially set for the meeting of creditors. Fed. R. Bankr. P. 4004(c).

The grounds for denying an individual debtor a discharge in a the boards 7 case are narrow and are construed against the moving party. Among other reasons, the court may deny the debtor a discharge if it finds that the debtor: failed to keep or produce adequate books or financial minutes; failed to clarify satisfactorily any loss of assets; committed a bankruptcy crime such as perjury; failed to obey a lawful order of the bankruptcy court; fraudulently transferred, concealed, or ruined property that would have become property of the estate; or failed to exact an approved instructional course concerning financial management. 11 U.S.C. § 727; Fed. R. Bankr. P. 4005.

Secured creditors may retain some rights to seize property securing an underlying debt even after a discharge is granted. Depending on individual circumstances, if a debtor wishes to keep certain secured property (such as an automobile), he or she may choose to “reaffirm” the debt. A reaffirmation is an agreement between the debtor and the creditor that the debtor will remain liable and will pay all or a part of the money owed, even even if the debt would otherwise be discharged in the bankruptcy. In return, the creditor promises that it will not repossess or take back the automobile or other property so long as the debtor continues to pay the debt.

If the debtor decides to reaffirm a debt, he or she must do so before the discharge is entered. The debtor must sign a written reaffirmation agreement and file it with the court. 11 U.S.C. § 524(c). The Bankruptcy Code requires that reaffirmation agreements control an extensive set of disclosures described in 11 U.S.C. § 524(k). Among other things, the disclosures must advise the debtor of the amount of the debt being reaffirmed and how it is calculated and that reaffirmation means that the debtor’s personal liability for that debt will not be discharged in the bankruptcy. The disclosures also require the debtor to sign and file a statement of his or her current income and expenses which shows that the balance of income paying expenses is sufficient to pay the reaffirmed debt. If the balance is not enough to pay the debt to be reaffirmed, there is a presumption of undue hardship, and the court may choose not to approve the reaffirmation agreement. Unless the debtor is represented by an attorney, the bankruptcy judge must approve the reaffirmation agreement.

If the debtor was represented by an attorney in connection with the reaffirmation agreement, the attorney must certify in writing that he or she advised the debtor of the legal effect and consequences of the agreement, including a default under the agreement. The attorney must also certify that the debtor was completely informed and voluntarily made the agreement and that reaffirmation of the debt will not initiation an undue hardship for the debtor or the debtor’s dependants. 11 U.S.C. § 524(k). The Bankruptcy Code requires a reaffirmation hearing if the debtor has not been represented by an attorney during the negotiating of the agreement, or if the court disapproves the reaffirmation agreement. 11 U.S.C. § 524(d) and (m). The debtor may repay any debt voluntarily, but, whether or not a reaffirmation agreement exists. 11 U.S.C. § 524(f).

An individual receives a discharge for most of his or her debts in a the boards 7 bankruptcy case. A creditor may no longer initiate or continue any legal or other action against the debtor to collect a discharged debt. But not all of an individual’s debts are discharged in the boards 7. Debts not discharged include debts for alimony and child support, certain taxes, debts for certain educational subsidy overpayments or loans made or guaranteed by a governmental unit, debts for willful and malicious injury by the debtor to another entity or to the property of another entity, debts for death or personal injury caused by the debtor’s operation of a motor vehicle while the debtor was intoxicated from alcohol or other substances, and debts for certain criminal restitution orders. 11 U.S.C. § 523(a). The debtor will continue to be liable for these types of debts to the extent that they are not paid in the the boards 7 case. Debts for money or property obtained by fake pretenses, debts for fraud or defalcation while acting in a fiduciary capacity, and debts for willful and malicious injury by the debtor to another entity or to the property of another entity will be discharged unless a creditor timely files and prevails in an action to have such debts declared nondischargeable. 11 U.S.C. § 523(c); Fed. R. Bankr. P. 4007(c).

The court may revoke a the boards 7 discharge on the request of the trustee, a creditor, or the U.S. trustee if the discharge was obtained through fraud by the debtor, if the debtor bought property that is property of the estate and knowingly and fraudulently failed to report the acquisition of such property or to surrender the property to the trustee, or if the debtor (without a satisfactory description) makes a material misstatement or fails to provide documents or other information in connection with an audit of the debtor’s case. 11 U.S.C. § 727(d).

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