Filing bankruptcy can be a daunting and overwhelming process.
It can be made far less stressful by simply understanding what lies ahead of you. This is the purpose of this website. We will make it straightforward and simple for you to understand.
Choosing a bankruptcy lawyer who is capable of guiding you through the process and ensuring that you are delivered on the other side with a great attitude and successful future financial situation. It is important to remember that chapter 7 bankruptcies were created to discharge debt and give honest debtors a fresh start, so try to remain hopeful as you move through the process.
What is Chapter 7 Bankruptcy?
When you file for chapter 7 bankruptcy, unlike a chapter 13, you are not required to file a plan for repayment of your debt. In the case of chapter 7 bankruptcies, the trustee of the court collects your nonexempt assets and sells them on your behalf to pay your creditors. You will be allowed to keep certain exempt properties, but the remainder of your assets will be liquidated.
Which properties will I have to surrender (non-exempt)?
Which properties will I get to keep (exempt)?
During a conversation preparing for chapter 7 bankruptcy, clients are often interested in which properties will be seized (or non-exempt properties) and which they will be eligible to keep (or exempt properties). Whether or not you will be able to keep your primary residence varies based on state and the amount of equity you have in your home. A bankruptcy lawyer can help you determine which assets will be kept in your specific circumstances.
Non-Exempt Properties (to be Surrendered):
- Cash, bank accounts, stocks, bonds, or other investments.
- A second car or truck.
- A second/vacation home.
- Expensive collections, heirlooms, or other valuables that are not essential to the individual’s employment.
Exempt Properties (to be Kept):
- Motor vehicles (up to a certain value).
- Jewelry (up to a certain value).
- Pensions.
- Damages awarded for personal injury.
- Public benefits (like welfare, social security, and unemployment compensation).
- A portion of your primary residence equity.
- Trade or professional tools (up to a certain value).
- Reasonably necessary clothing, household goods and furnishings, and appliances.
Will I qualify for a Chapter 7 Bankruptcy?
To qualify for a chapter 7 bankruptcy, you must:
- Be an individual, partnership, corporation, or another business entity.
- Not have filed another petition for bankruptcy in the last six months.
- Have first received credit counseling from an approved counseling agency within the last six months. Your bankruptcy attorney can direct you on how to find and setup time with an approved pre-bankruptcy credit counseling agency. More information is also available on the Department of Justice website.
What does the Chapter 7 Bankruptcy process look like for me?
The process of filing for a chapter 7 bankruptcy is very straightforward. The following sequence is typically followed:
- First, you will need to contact a qualified bankruptcy lawyer. An expert lawyer will make sure that you have the clearest path to a new financial future.
- Second, you will need to pass the “means test”. This test will determine whether or not you have the financial means to pay off your debts (rendering you ineligible for the benefits of a chapter 7).
- Third, a trustee is granted for your case. The trustee is the individual who will seize control of your assets, determine which assets are to be kept and which are to be sold off, and will lay out your go-forward plan.
- Once your trustee is able to evaluate all your assets, they will begin to liquidate the non-exempt assets. Once this liquidation process is underway, the resulting liquid cash will be used to pay your day-to-day expenses, with the rest going to your creditors.
- The trustee will begin discharging funds to your creditors, working with each to insure that they don’t take action against you in the form of collections or wage garnishment.
- Finally, once your bankruptcy process is complete, you’ll be discharged from the bankruptcy and free to make a new financial start.
For more information about the chapter 7 bankruptcy support provided by Chang Legal in the Schaumburg, IL area, contact us today at contactus@changlegal.com or call 847.907.4971.