If a person is considering filing for Chapter 7 bankruptcy here in Denver, here’s a quick overview of the 10 steps most bankruptcy cases follow.
1. Consider what type of debt you have and whether it is dischargeable or not.
Some debts, such as child support obligations, student loans or tax debt are not dischargeable in Chapter 7 bankruptcy. And if you have secured debt, meaning you pledged collateral for a loan like a mortgage or car loan, the creditor can take the property through foreclosure or repossession if the debt isn’t paid. If these are the only kinds of debt you have, Chapter 7 bankruptcy may not be the best way to go for you. Consult with a knowledgeable bankruptcy attorney in your area to determine if you can file for Chapter 7.
2. Determine what your particular state property exemption laws are.
Every state has exempt property laws and all of the state exemptions are different. These state exempt property laws determine what types of property you get to keep if you file for Chapter 7 bankruptcy or, in some cases, how much equity in particular types of property you get to keep. Because each state law is different you really need to talk to a bankruptcy attorney in your state to understand your property exemption rights before filing for bankruptcy.
3. Determine if you are eligible to file a Chapter 7 bankruptcy or not.
The U.S. Bankruptcy Code has a “means test” to determine if you are allowed to file for Chapter 7 bankruptcy or if you will have to file a Chapter 13 bankruptcy instead. If your average income during the six months before you file is more than the median income for a family of your size in your state, you may not be allowed to use Chapter 7, depending on your income and debts.
4. Decide how you will deal with your secured debts.
If you have secured creditors (in other words you have pledged property as collateral for a loan like a car or a mortgage on your house), you’ll need to pay something to your secured creditors if you want to keep the property. When you file for Chapter 7 bankruptcy, you will have to decide whether you want to “redeem” the property (pay the creditor the current replacement value of the property), “reaffirm” the debt (agree on new contract terms with the creditor), or “surrender” the property (let the creditor take the property through foreclosure or repossession). Again, these are decisions that you should make with an experienced bankruptcy attorney in your area.
5. Fill out and sign your Petition for Bankruptcy.
You will need to complete a few dozen pages of forms, in which you tell the court about all of your property, debts, income, and expenses. You’ll list the names and addresses of all your creditors by type of creditor (unsecured creditors, secured creditors, etc.), note which debts are disputed, list the property you are claiming as exempt, and decide what you want to do about each of your secured debts. These forms are quite technical and you should always use an experienced bankruptcy attorney to help you properly file for bankruptcy since when you sign and file them you are swearing to the court under penalty of perjury that they are true and accurate.
6. File the forms with the Bankruptcy Court in your area.
Filing your petition with the bankruptcy court officially starts your Chapter 7 bankruptcy case. Most people file all the forms at once, but if you’re in an emergency, you can file just a two-page form, and then file the complete set of the forms within 14 days. Your bankruptcy attorney will help you decide how to begin your case.
7. Go to a meeting with the Trustee assigned to your case.
In Chapter 7 bankruptcy cases the court appoints a “Panel Trustee” to your case. The Trustee will schedule and conduct a meeting called a 341 meeting where the trustee and perhaps a creditor or two of yours will review your case and ask you questions about the information in your forms. Your attorney will attend this meeting with you and help you to comply with the Trustee’s requests, if any.
8. Sometimes you will need to file objections or motions if needed.
If you dispute a creditor’s claim against you or you want to eliminate certain liens, you’ll sometimes need to address these matters by filing objections or motions in your bankruptcy case. This is another area where you really need an experienced bankruptcy lawyer to help you.
9. Deal with all of your secured creditors.
When you filed your bankruptcy forms, you completed a form in which you stated how you intended to handle your secured debts. Before your case is closed, you’ll need to act on these matters by negotiating with your secured creditors and either redeeming, reaffirming or surrendering the property. An experienced bankruptcy attorney will be invaluable in these negotiations and decisions.
10. Get your discharge from your debt burden.
This is why you filed Chapter 7 bankruptcy. At the end of a successful bankruptcy, the court will issue an order saying that your dischargeable debts are finally discharged. Once a debt is discharged, you no longer have a legal obligation to pay it and the creditor has no legal right to demand it. This is your fresh start to financial freedom that prompted you to start this process in the first place.
If we can help you with the decision to file bankruptcy and to represent you through the bankruptcy process, please give us a call at (720) 457-5959 or http://familylawattorneyindenver.com