A Chapter 7 bankruptcy is also called the fresh start provision of the bankruptcy code. A Chapter 7 allows you to wipe out all your debt and get a fresh start. In a Chapter 7 bankruptcy, we show the court that you are unable to pay the debt that is currently hanging over your head based on your budget. Typically, from the time that we file your chapter 7 bankruptcy petition, you are granted a discharge in about 90 days. So in 90 days you will no longer have that debt.
Not all debts can be discharged in a Chapter 7 bankruptcy though; each case is case specific. One of our bankruptcy attorneys can help advise you if Chapter 7 bankruptcy is good for you. Some debts that cannot be discharged in a chapter 7 bankruptcy are secured debt (debt that is tied to collateral like a mortgage or car note) – if you want to keep the property – and child support.
If you have a mortgage or car that cannot be discharged in a chapter 7 bankruptcy because you want to keep that house or car, you may still be able to file a Chapter 7 bankruptcy and just reaffirm the debt that you want to keep through a reaffirmation agreement. A reaffirmation agreement is a contract between you and a creditor where you agree to give up your chapter 7 bankruptcy right to wipe out that particular debt and treat the debt as if you never filed bankruptcy. Your bankruptcy attorney will help you decide if the reaffirmation agreement is in your best interest.
Typically, during a Chapter 7 bankruptcy case you will only have to attend one hearing, the 341 hearing, also called the meeting of the creditors. The 341 hearing is run by the Chapter 7 Bankruptcy Trustee. Most people get the Chapter 7 bankruptcy trustee confused with the judge. At the 341 hearing, it’s not uncommon to hear a debtor answer a question with “yes your Honor” even though there is no judge at this hearing. The trustee is not a judge, but it is his or her job to scrutinize the bankruptcy case and ensure that it complies with the Bankruptcy Code.
At the 341 hearing, you will be required to swear under penalty of perjury that the documents you submitted to the court are true and accurate. The Chapter 7 Bankruptcy Trustee is not out to get you, but you must be completely honest and answer their questions. Some of the questions the Chapter 7 Bankruptcy Trustee will ask are:
At the conclusion of you Chapter 7 bankruptcy, you will be released from paying most of your debts, and creditors will no longer be able to take any action against you for those debts.