Chapter 7 is the “liquidation” chapter of bankruptcy—its name literally based on a book chapter. This 7th chapter of the U.S. Bankruptcy Code is a federal remedy for people and companies who cannot repay their debt. It is the quickest and simplest way to file bankruptcy.
In about four months after filing for Chapter 7 bankruptcy, debtors can get their discharge order, which means that they no longer have to pay their debts and the case is closed. Most people will never have to sell property in order to get their discharge order and to start on the road to financial recovery. They can even start improving their credit score right away.
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The basic bargain of Chapter 7 Bankruptcy is that if you really are insolvent, then you should be able to get rid of the debt you cannot afford to repay. You demonstrate this inability to pay in the documents you file with the court. This allows you and your creditors to go your own way without having to pretend that the debt will be repaid. You are unburdened of having to pay, and the creditors can concentrate their efforts on collecting from those who can pay.
For example, insolvent people can often only afford to make the minimum payment on their credit cards. That will never pay off the debt, and in most cases the balances go up, even if you stop using your credit cards. It is like running on a hamster wheel that is rolling backwards.
If you qualify for chapter 7 bankruptcy, and your attorney advises you that it is the best chapter for you, then it works as follows:
The 341A hearing is where the Chapter 7 Trustee examines you for basically one reason only: To find out if there are any assets that are “non-exempt” (unprotected) that can be sold to pay your creditors at least some of the money they are owed. About 99% of cases are “no-asset” cases, or “no-distribution” cases, and you usually only need to go to one of these meetings. You wait around with other debtors waiting to be examined for an hour or so, and then spend just a few minutes being examined yourself. You will have an opportunity to watch other examinations so you can see how it’s done prior to your examination.
Once the Trustee concludes the examination, then you just go home, or back to work. You’ve finished the majority of the work in your project to get debt free.
Depending on your circumstances, you may have some additional matters to deal with after the hearing, such as dealing with secured collateral. More likely, however, you will only have to wait. Then you receive your Chapter 7 discharge order and your creditors are permanently kept from trying to collect the debts they had against you. The case closes, and you live your life with a fresh start from dischargeable debts.
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I would HIGHLY recommend you contact LeverLaw for filing your Bankrupty proceedings! I was referred to LeverLaw firm after an unfortunate experience with another Bankrupty attorney. I then contacted LeverLaw for a free consultation. Upon meeting with Mr. Lever, I felt confident enough in knowing that I'd made the right choice in retaining him to initiate my Chapter 13 Bankruptcy.
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