Chapter 7 is a term heard often in these days of challenging economic times. In fact, Chapter 7 has been a big term for the last 30 years since its provision was first enacted by congress in 1978.
Chapter 7 allows for the forgiveness of unpayable debt – the provision exists for those who simply cannot repay what they owe. However, if you want to keep certain items that have a lien attached to them, then Chapter 7 will not allow these items to be placed under its trusteeship. If you want to keep them, you will have to pay for them. It’s that simple. This is not Chapter 13, which is provides for a repayment program to your creditors.
Regardless, if Chapter 7 is something you want to, or have to, pursue, then it is best if you align yourself with an experienced bankruptcy attorney to make sure you follow the right path to give yourself the best possible probability that your filing will be granted.
Essentially, once you have filed for Chapter 7 protection, you will go to a hearing where a bankruptcy trustee will ask you questions under oath about your financial and debt situation. Your bankruptcy lawyer in Fort Mill SC, or wherever you want to file, will be there with you in case a problem arises, or to help clarify your financial status, and to make sure that the proceedings go as they are supposed to. Your creditors will not be present during this hearing. Back statements, tax forms, and other documents may be needed at this hearing. These will help you move your case forward, and help the trustee determine the validity of your request.
The trustee will make sure all of your paperwork has been filled out accurately, to make sure that your family has no spendable income after making your monthly payments, and to confirm your present income. A “Means” test was created by congress in 2005 that establishes what people in your state make – if you make more than the means, you may not be eligible for Chapter 7 protection. You will have to complete a Means Test and pass it in order to file Chapter 7. Unfortunately, it is possible to fail this test even if you demonstrate that you have no spendable income left after bills have been paid. Again, this is why it is so important to seek out and hire a bankruptcy attorney who understands the procedures and potential pitfalls of this process.
Once all this has been done, the trustee will see what assets you have that may be sold off to repay your creditors. There are exemptions to this, of course.
If the trustee sides with you, your creditors will have no recourse other than to accept their decision.
If you are contemplating filing for bankruptcy, be sure to hire a bankruptcy attorney to help protect your rights and prepare you to meet with the trustee.