Chapter 7 Bankruptcy

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CHAPTER 7 BANKRUPTCY SUMMARY

  • You discharge all of your unsecured debt (credit cards, medical bills, etc…).
  • You can keep you home and car (need to be current on the payments).
  • Take a total time of about 90 days.
  • There are no payments to the trustee or courts.
  • You keep you tax refunds.
  • Attorney Fee and Costs are 1,300.00 to 3,000.00 dollars depending on complexity.
  • Considered traditional bankruptcy.

Chapter 7 bankruptcy is a liquidation of your debts.  You typically pay nothing to unsecured creditors.  Chapter 7 bankruptcy is what people typically think of as bankruptcy. Chapter 7 bankruptcy is designed for debtors who are unable to pay back their debts and are below the means testing.

Secured Debt – Debts that are secured (homes, cars, and furniture loans) are usually repaid and a debtor can retain the property. Alternatively, the debtor can return the secured property to the creditor and pay nothing toward the debt.

COMMON CHAPTER 7 QUESTIONS

1.  WHO IS ELIGIBLE TO FILE CHAPTER 7 BANKRUPTCY? Any person who resides in the United States may file chapter 7 bankruptcy.

2.  HOW MUCH IS A CHAPTER 7 FILING FEE? Chapter 7 filing fee is $309.

3.  HOW DO I PAY FOR A LAWYER? A typical chapter 7 bankruptcy is 1,300.00 – 1,500.00 dollars (this includes the 306.00 filing fee and reaffirmation.  Unfortunately, we cannot take credit cards or file your case and take installment payments after you file. We would be a debt that would be discharged in bankruptcy.  There are a number of ways to pay for your bankruptcy.  First, stop paying your consumer or credit card debts.  Second, you can increase your dependents on your pay check for a short time. This is basically getting your tax refund early. Once you get the money remember to switch the dependents back so that you don’t owe taxes at the end of the year.  Third, use your credit cards for day-to-day living and save your income for attorney fees.  Lastly,  use your tax refund money or get an anticipation loan from your refund.

4.  WHERE IS A CHAPTER 7 BANKRUPTCY CASE FILED?  A chapter 7 bankruptcy case should be filed in the district where the debtor resides or maintains a principle place of business for the greater portion of the last 6 months.

5. MAY A SPOUSE FILE BANKRUPTCY WITHOUT THE OTHER SPOUSE FILING CHAPTER 7?  A married couple may file for bankruptcy together or either party may file separately. There is not a requirement that a married couple file bankruptcy together. Typically, if both parties have substantial debts or there are a number of joint debts, it is logical for both parties to file chapter 7 bankruptcy rather than filing separately.

6.  IS MY NAME GOING TO BE PUBLISHED IF I FILE A CHAPTER 7 BANKRUPTCY?  When a person files chapter 7 bankruptcy, there is a public record indicating the bankruptcy has been filed.  There is no way that you can make a bankruptcy completely private.

7. ARE EMPLOYERS NOTIFIED OF A CHAPTER 7 BANKRUPTCY FILING?  Employers are usually not notified of a chapter 7 case.  In contrast, a chapter 13 case usually provides for a wage withholding order in which a portion of your wages is paid to the trustee for your creditors.

8.  WHAT IS THE CHAPTER 7 BANKRUPTCY PROCESS?  Call our office and speak with an attorney for an initial review of your situation.  After it appears that bankruptcy is in your best interest, we will set-up an hour appointment to get all the information.  From that information we prepare your bankruptcy petition.  You sign the petition and we file it with the court electronically.  The court mails notices to your creditors telling them that you filed for bankruptcy.  About five weeks later, we meet with the bankruptcy trustee to review your petition (341 meeting).  You get your bankruptcy discharge about 90 days later.

9.  WHAT IS A 341 MEETING?  WHAT WILL I NEED TO BRING?  The first meeting of creditors or 341 meeting is a meeting to review your petition with the trustee.  They will ask you if you signed the petition and if there is anything that has changed.  We attend the meeting with you.  It is not in a courtroom and no judge will be present.  You will need a social security card and driver’s license.

10. WHO IS A CHAPTER 7 TRUSTEE?  Chapter 7 trustee is a court appointed officer, who is a private attorney.  They are appointed to review your bankruptcy petition.   It is the trustee’s duty to check your petition for accuracy and distribute assets that are not exempt under the bankruptcy code.

11. WHAT OBLIGATIONS DO THE DEBTORS HAVE TO THE TRUSTEE?  The Bankruptcy Code  requires that a debtor cooperate with the trustee in providing information and fully disclosing assets and liabilities. In the event that a person fails to cooperate with a chapter trustee, the chapter 7 trustee may request that the court dismiss a bankruptcy and deny a debtor a discharge for failing to cooperate.

12. WHAT HAPPENS AFTER MY 341 MEETING?  After the 341 meeting, there is typically a 60 day period in which creditors have an opportunity to file a claim of nondischargeability. For most debtors, nothing happens during the waiting period after the 341 meeting. In the event that debts will be reaffirmed, typically reaffirmations are processed during this 60 day period.

13.  WHAT PROPERTY CAN I KEEP AFTER MY CHAPTER 7 BANKRUPTCY?  The bankruptcy code provides for exemptions (property that you keep after your bankruptcy).  Typically everything you own is exempt.  You keep your exempt property.  Specifically, the federal bankruptcy code exempts the following:

  • Equity in the debtor’s primary residence up to $21,625.00 per person. “d(1) exemption”
  • Equity in a motor vehicle up to $3,450.00 “d(2) exemption”
  • Household goods up to a value of $11,525.00. “d(3) exemption”
  • Jewelry up to $1,450. “d(4) exemption”
  • Exemptions for tools up to $2,025, “d(6) exemption”
  • Miscellaneous exemption in any property the debtor wishes up to $1450.00. In addition, up to $11,525.00 of unused exemption in a debtor’s primary residence can be used as a general exemption. As a result, an individual who does not own a residence may exempt up to $11,525.00 in any property they wish in addition to the general $1,450.00 exemption.”d(5) exemption”
  • Typically all retirement accounts.

*All of the above exemptions are doubled for a married couple.

UPDATED 7/2013

14.  CAN I KEEP SECURED PROPERTY SUCH AS HOME AND CAR? Yes, you can keep secured property and continue to make the payments.  Alternatively, you can reject the property (give it back) and stop make the payments.  If you keep the property, the creditor usually has yousign a reaffirmation agreement.  A reaffirmation agreement is a contract between you and the creditor which provides for repayment of the debt owed and the amount of the payment.   A third option allows you to redeem the property at fair market value. This requires full payment of the fair market value at the time of the redemption.

15.  WHAT SHOULD I DO IF A CREDITOR CONTACTS ME AFTER I FILE FOR BANKRUPTCY?After your case has been filed, we will provide you with your case number, the date of filing, your trustee, and judge’s name.  If a creditor contacts you, give them that information.  They should stop contacting you at that point.  The court mails out notices about a week after filing.  If the problem continues, contact us with the phone number and address of the creditor involved.

16.  WHAT CREDITORS SHOULD BE LISTED, WHAT IF I FORGET A CREDITOR?  The bankruptcy code requires that you make your best efforts to determine your creditors.  You should list all of your creditors.  If you are unable to determine who all of your creditors are, we suggest that you obtain a credit report from www.annualcreditreport.com.  In the event that you forget a creditor we can add a creditor until your case is discharged. There is a fee of $100.00 for each additional amendment to your creditor list (not per creditor). After your case is discharged you may add a creditor provided that they were unknown at the time of your filing. At that point, they will be treated as discharged. This is done by filing a motion to reopen your bankruptcy case which can be done at any time for an additional fee. Contact us immediately if you discover you missed a creditor.

17.  CAN I PAY MY DEBTS AT A LATER DATE IF I WANT TOO? –Yes, you can always pay creditors if you want to after your bankruptcy.  Bankruptcy prevents your creditors from collecting against you.  It does not prevent you from paying the debt back at a later date when or if you are financially able to do so. (i.e. wining the lottery).

18.  HOW LONG WILL IT TAKE TO COMPLETE MY BANKRUPTCY?  It takes approximately 90 days from start to finish. Occasionally, the court clerks are behind on issuing discharges. The discharge is a photocopied notice from the court.

19.  HOW WILL I KNOW MY DEBTS ARE DISCHARGED?  All the debts that you listed in your bankruptcy schedule will be discharged when you receive your Notice of Discharge in the mail. Certain debts may be non-dischargeable such as student loans and taxes. If you have questions on which debts are able to be discharged, speak with your attorney.

20.  WILL I GO TO COURT OR SEE A JUDGE?  Typically you will neither go to Court nor see a Judge as part of your Chapter 7 Bankruptcy.

21.  WHAT DEBTS ARE NONDISCHARGEABLE UNDER CHAPTER 7?  Generally, all debts are dischargeable under Chapter 7 except debts as follows:

  • Most tax debts.
  • Debts for fraud, embezzlement, larceny.
  • Debts for alimony or child support and certain other divorce related debts included in a property settlement.
  • Debts related to a divorce settlement.
  • Debts for intentional or malicious injury to a person or property.
  • Criminal Fines or penalties.
  • Student Loans.
  • Debts for personal injury or death caused by the debtor’s operation of a motor vehicle while intoxicated.

22.  HOW DOES THE FILING OF A CHAPTER 7 BANKRUPTCY AFFECT LAWSUITS AND COLLECTIONS ACTIONS AGAINST THE DEBTOR?  The filing of a chapter 7 bankruptcy stops all creditor collection activity.  Debts that are fully dischargeable and are unsecured are discharged and are unable to be collected. In the event that the creditor has a security interest in property owned by the debtor (i.e. a car or a home), then the creditor must receive a “Lift of Stay” in order to pursue the retrieval of their collateral or continue with foreclosure action.

23. CAN A UTILITY COMPANY REFUSE TO PROVIDE SERVICE TO A DEBTOR WHO HAS FILED CHAPTER 7 BANKRUPTCY AND DISCHARGED A UTILITY BILL?  No, but they can require that a debtor provide a security deposit for future services.

24. HOW DOES A CHAPTER 7 DISCHARGE AFFECT THE LIABILITY OF COSIGNERS OR OTHER PARTIES LIABLE ON A DEBT?  A chapter 7 provides for a discharge of the debt associated with the individual who filed for bankruptcy. A  discharge does not protect the enforceability of the debt against codebtors or other parties who may be liable on the specific debt.

25.  CAN MY DISCHARGE BE DENIED BY THE COURT?  Cases that are filed in bad faith or involve fraud during the bankruptcy process can be denied a discharge. This is extremely unlikely and almost never happens.

26.  CAN I GET CREDIT IN THE FUTURE?  Yes, you can get credit in the future.  Immediately after you receive your discharge, you will get preapproved credit card solicitations.  You typically can qualify for a mortage within 24 months.  Bankruptcy will be on your credit history after you file for bankruptcy relief. When a creditor decides to extend you credit, they typically consider your current income, current expenditures, and your credit history

When you need a Grand Rapids Chapter 7 Bankruptcy Attorney, remember to call Krupp Law Offices PC for fast honest advice about your financial problems and get honest advice about your options.  Krupp Law Offices represents clients in cases throughout West Michigan, including the cities of Grand Rapids, Kalamazoo, Big Rapids, Ionia, Muskegon, Grand Haven, Stanton, Greenville, Wayland, Allegan, Holland, Ludington, Cadillac, Baldwin, Newaygo, White Cloud, Fremont, Coopersville, Reed City, Lake City, Hart, Hastings, Middleville, Wyoming, Rockford and Portage, including Kent County, Ottawa County, Newaygo County, Ionia County, Mecosta County, Barry County, Montcalm County, Allegan County, Kalamazoo County, Osceola County, Lake County and Muskegon County, Michigan.

Call for a free phone consultation.  Our office can help.

KRUPP LAW OFFICES PC
Grand Rapids Chapter 7 Bankruptcy Attorneys
161 Ottawa NW Suite 404
Grand Rapids MI 49503
616-459-6636 or Mail@krupplaw.com

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