Chapter 7 Bankruptcy

Who Can File for Chapter 7 Bankruptcy?

Chapter 7 exists in order to give consumers a “fresh start” from which they can begin to rebuild their credit. Chapter 7 Bankruptcy is appropriate for many people whose debt is comprised primarily of consumer debt.

In a Chapter 7 Petition, you disclose all your assets, debts, income and expenses to the Court.  The Court applies certain exemptions to your assets.  If you have assets over and above the allowed exemptions, those are turned over to the Court, and paid on a pro rata basis to your unsecured creditors (in many cases, once the exemptions are applied, no assets remain for payment to unsecured creditors).

At the end of the proceeding, the Court issues an Order of Discharge, and you are no longer liable for applicable debts.

The Chapter 7 Process

1) Pre-Petition – you must gather all relevant information to prepare the petition.  This includes information regarding all your assets, debts, income and expenses.  You must also determine in some cases how you would like the exemptions applied.  Exemptions are statutory rules that dictate what property you may keep during the Bankruptcy process.  Exempt property may not be applied to your outstanding debt.  Each state has its own exemptions, and there are also Federal exemptions.  You must choose one set of exemptions or the other.  Some states require that you use State exemptions.  Some states allow you to use the Federal Exemptions.  You must also take Pre-Petition Consumer Credit Counseling.  This is required within the 180 days prior to filing the Petition.

2) After Filing your Petition – Immediately upon filing of your Petition, a 120-day stay goes into effect.  Under the 120-day stay, all creditors must cease any efforts to collect on debts that you owe.  In the event that you are contacted by a creditor after filing, you should tell the creditor you’ve filed a Petition for Chapter 7 Bankruptcy, and give them the case number.

Once your Petition has been filed, the Court will also set a date for the Meeting of Creditors.  The Meeting of Creditors (sometimes called a “341 meeting”) is a public meeting held between you and the Chapter 7 Trustee.  The purpose of the meeting is to give both the Trustee and your creditors an opportunity to question you under oath.  You will be sworn in, and the Chapter 7 Trustee will ask you questions regarding your Petition and its contents.  Any creditors who are present will then be given an opportunity to question you.  As a general rule, creditors are not present at this meeting; however, they do show up from time to time.

Your creditors have a period of time after the 341 meeting to file objections to your Petition.  The objections available to creditors are limited.

After your meeting of creditors, you are required to complete Post-Petition Credit Counseling.  Often, this is available from the same organization that provided your Pre-Petition counseling.  The Court will not grant a discharge, and may actually dismiss your Chapter 7 Petition if you do not complete your Post-Petition counseling in a timely manner.

So long as the Trustee has no further questions regarding your Petition, and after the creditors’ time for objections has run, if everything has proceeded smoothly, the Court will grant a discharge of your debts.

A Bankruptcy Attorney Can Help

There are many points along the way when a bankruptcy attorney can assist you in making sure the Chapter 7 process runs smoothly.    From helping you to determine whether you qualify for a Chapter 7, to assisting you in determining which exemptions to use, to preparing you for your 341 meeting – a bankruptcy lawyer can help make sure your Chapter 7 Petition moves smoothly through the Court, setting you on the path to a fresh start.

Contact us today for a consultation on Chapter 7 Bankruptcy.

We serve all towns in Vermont – including Montpelier, Barre, Burlington, Rutland, White River Junction, Brattleboro, and St. Johnsbury – and all counties: Chittenden County, Orleans County, Essex County, Franklin County, Lamoille County, Caledonia County, Addison County, Washington County, Orange County, Rutland County, Windsor County, Bennington County, and Windham County.