Chapter 7 Bankruptcy To Provide You A Fresh Financial Start
Federal law allows for you to file Chapter 7 bankruptcy as a means of eliminating certain kinds of debt. At Poole, Mensinger, Cutrona & Ellsworth-Aults, our bankruptcy lawyers have extensive experience helping Delaware residents achieve a new start through filing Chapter 7. When meeting with us during an initial consultation, we will examine your situation and let you know if Chapter 7 bankruptcy is the right option for you.
How The Chapter 7 Bankruptcy Process Works
In a Chapter 7 case, the Bankruptcy Court appoints a trustee to examine the debtor's assets to determine if there are any assets not protected by available "exemptions". Exemptions are laws that allow a debtor to keep, and not part with, certain types and amounts of property. For example, exemption laws allow a debtor to protect a certain amount of equity in the debtor's residence, motor vehicle, household goods, life insurance, health aids, retirement plans, specific future earnings such as Social Security benefits, child support and alimony, and certain other types of personal property.
If there is any nonexempt property, it is the trustee's job to sell it and distribute the proceeds among the unsecured creditors. Although a liquidation case can rarely help with secured debt (the secured creditor still has the right to repossess the collateral if the debtor falls behind in the monthly payments), the debtor will be discharged from the legal obligation to pay unsecured debts such as credit card debt, medical bills and utility arrearages. However, certain types of unsecured debt are allowed special treatment and cannot be discharged. These include most student loans, alimony, child support, criminal fines and most taxes.
Requirements For Chapter 7
You must list all of your debts, (including claims against you which you dispute, personal loans, etc.), assets and other information in the petition.
About three to four weeks after the petition is filed, a hearing, (known as a 341 creditors' meeting) is held in Wilmington to give your creditors an opportunity to question you and to determine if the petition is in order. A trustee is assigned to your case, and he/she will ask whether you are familiar with the petition, whether you have listed all your debts and assets, and how you got into financial trouble.
Your assets which are not exempt will be required to be turned into the court to be divided among all your creditors.
About two to three months after the creditors' meeting, you will receive a final discharge of all dischargeable listed debts.
Even if a debt can be discharged, you may have special reasons why you want to promise to pay it. For example, you may want to work out a plan with the bank to keep your car, to promise to pay that debt, you must sign and file a Reaffirmation Agreement with the court. Reaffirmation agreements are under special rules and are voluntary. They are not required by bankruptcy law or by any other law.
They must be voluntary and must not place too heavy of a burden on you and your family and must be in your best interest. They can be cancelled anytime before the court issues your discharge or within 60 days after the agreement is filed with the court, whichever gives you the most time.
If you reaffirm a debt and then fail to pay, you owe the debt the same as though there was not a Bankruptcy filed. The debt will not be discharged and the creditor can take action to recover any property on which it has a lien or mortgage. The creditor can also take legal action to receive a Judgment against you.
Is Chapter 7 Bankruptcy Right For You?
If you receive a discharge in a Chapter 7, you cannot file again for eight years. This means if any medical, hospital, or other bills arise in the next few years, you cannot file bankruptcy to free yourself from them until eight years have passed.
You may find it difficult to become bonded after you file a bankruptcy.
Even if you file a bankruptcy, co-signers on your debts are still held liable.
Once you file a petition with the court, you cannot voluntarily dismiss your case. A Motion to Dismiss has to be filed and the trustee and creditors have an opportunity to object.
If you have paid any monies to creditors within 90 days from the filing of the petition for bankruptcy or any payment to family members within one year, the court may request this payment back so that it can be evenly disbursed to your other creditors.
Here To Assist You
In the event you have any questions or wish to set up a free initial consultation with an experienced bankruptcy attorney, please contact Poole, Mensinger, Cutrona & Ellsworth-Aults, by calling 302-428-0100 or filling out our online form.
Poole, Mensinger, Cutrona & Ellsworth-Aults, is a debt relief agency. We help people discharge their debts through the bankruptcy code. The information on this website is for general information purposes only. Nothing on this site should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship. This is advertising material.