Chapter 7 Bankruptcy

       Chapter 7 bankruptcy is a liquidation proceeding in which the debtor’s non-exempt assets are sold by the Trustee and the proceeds distributed to the creditors by the Trustee. Eligibility to file Chapter 7 bankruptcy is determined by the means test, or monthly income test. In most cases, the debtor’s assets are entirely exempt and therefore nothing will be taken from the debtor, by the Trustee and sold. Chapter 7 bankruptcy is generally a 4 to 6 month process and is available to individuals, couples, and corporations.

Filing Chapter 7 Bankruptcy

       The case is begun by filing the petition with the Bankruptcy Court. This process is performed through electronic filing and can be “officially filed” at any time of day or night. Within the petition, you must list ALL of your ASSETS and DEBTS, along with your income for the past 6 months. This is the most important and time consuming part of a bankruptcy filing. It is important that every creditor is listed in the petition 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.

       The petition also lists your property, debts secured on that property, and the present market value of the property. Property includes cars, boats, and other “personal” property, not just real estate property. Property not encumbered by secured debt can be protected through the exemptions provided by Virginia Statute.

       Your petition must be signed by you under penalty of perjury. Although some mistakes are natural and to be expected, fraud and misleading statements are criminal acts investigated by the FBI.

       Bankruptcy is a SNAPSHOT of your financial situation that exists on the day the case is filed. The proceedings in bankruptcy are only concerned with your assets and debts as they were on the day the case was filed. However, intentionally disposing of your assets prior to filing bankruptcy is considered fraud and will be investigated by the Trustee.

       Once your petition is filed, you are protected from lawsuits and garnishments through the automatic stay. The automatic stay creates a legal barrier to current and future legal proceedings against you from creditors and collection agents. Even better, creditors are prohibited from contacting you during the bankruptcy process. No more phone calls, collection letters, or other harassing actions from your creditors. SLEEP WELL, AGAIN!!!

What is a Chapter 7 “Discharge”

 "Discharge” in the bankruptcy sense refers to clearing the debtor’s slate of all, or most, past debts. Although many people expect that filing bankruptcy will wipe out all of their debts, that is not always the case. Bankruptcy only discharges certain debtors of certain debts. The availability of discharge depends on the type of bankruptcy proceeding involved, who the debtor is, and what type of debts the debtor has. An experienced bankruptcy attorney can advise his or her clients as to which debts will be discharged by a Chapter 7 bankruptcy and which debts will remain.

Debts that remain AFTER DISCHARGE

The rules on which debts are discharged, or eliminated, are different depending on which type of bankruptcy is filed. A lawyer experienced in bankruptcy law can advise his or her clients on whether and how particular debts will be affected by a bankruptcy discharge. Generally speaking, in a Chapter 7 proceeding, the following debts are not discharged.