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What is Chapter 7 Bankruptcy?
Chapter 7 bankruptcy is a liquidation proceeding in which the
debtor's non-exempt assets, if any, are sold by
the Chapter 7 trustee and the proceeds distributed to creditors
according to the priorities established by the United States
Bankruptcy Code.
You must be eligible to file Chapter 7
bankruptcy. This is determined by the means test which is
why we need your last 6 months worth of pay stubs, beginning
with the month prior to your filing bankruptcy.
In most cases, all the assets are exempt, therefore there are no
assets to liquidate and there is no dividend to creditors.
Chapter 7 is generally the simplest and quickest form of
bankruptcy and is available to individuals, married couples,
corporations and partnerships.
The most important forms are the
official petition, schedules, and statement of financial
affairs.
The petition consists of your name, address, and filing info
such as the type of of bankruptcy you are filing & whether you
are paying your filing fees in full, in installments, or
requesting a fee waiver.
Your schedules are where all assets, liabilities, income, and
expenses must be listed, along with some recent financial
history.
This is the most important and most time consuming
part of a bankruptcy filing.
It is extremely important that every creditor is listed in the
schedules with an accurate mailing address.
You must list ALL
of your debts, even if the debt is non dischargeable or if you
intend to reaffirm the debt (keep the property & continue making
regular payments until the debt is paid in full. The
court cannot discharge any debt that is not listed or did not
get notice of your bankruptcy filing due to an incorrect
address.
The schedules also list your property,
any debts secured by that property, and the sale value of the
property. Property means assets or & possessions, not just
real estate. Your choice of exemptions is made on one of the schedules.
Both the schedules & statement of
financial affairs are signed by the debtor under penalty of
perjury. The schedules are filed with the bankruptcy clerk
in the district in which you live, or have lived for the greater
part of the last 180 days.
For most purposes the rights of the
debtor and the creditors are those that exist on the day the
case is filed. All of the proceedings in bankruptcy after the
filing relate to the situation as it was on the day the case was
filed.
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