What is Chapter 7 bankruptcy?
Chapter 7 is the traditional liquidation or “straight” bankruptcy. In all
Chapter 7 cases, a trustee is designated by the court to administer the debtor’s
nonexempt assets for the benefit of the debtor’s creditors.
Eligibility
Individuals are qualified as Chapter 7 debtors if they have a domicile, a place
of business, or property in the United States. Note that citizenship is not
required.
Discharge in Prior Case
You are eligible to receive a discharge in Chapter 7 Bankruptcy even if
you previously received a Chapter 7 Bankruptcy discharge, as long as
your Chapter 7 discharge was entered at least eight years before the
filing of your current Chapter 7 case. You can also receive a Chapter 7
discharge in your current case if you previously filed for Chapter 13
Bankruptcy, so long as the discharge in your Chapter 13 case was entered
at least four years before the filing of your new Chapter 7 case.
Credit Counseling Requirement
For cases filed after October 17, 2005, you must obtain a certificate from an
approved credit counseling agency before you can file your case. This can be
done over the internet and will likely cost approximately $35-$45. Your attorney
will provide you with information on how to obtain this counseling.
An individual cannot file a Chapter 7 case unless, during the 180-day period
before filing, he or she has received an individual or group briefing from and
approved nonprofit budget and credit counseling agency.
Automatic Stay
When a debtor files for bankruptcy, something called the “automatic stay”
immediately stops any lawsuit filed against the debtor and virtually all actions
against the property by a creditor, collection agency or government entity.
Especially if a debtor is at risk of being foreclosed on, losing such basic
resources as welfare or unemployment benefits, or a driver’s license or a job
(because of a raft of wage garnishments), the automatic stay provides immediate protection.
Financial Management Course
For cases filed after 10/17/2005, you are required to complete a financial
management course before receiving your discharge. You must have completed this
course (usually about 2 hours) and submitted the certificate of completion to
the court no later than 45 days after the date first set for your meeting with
the Trustee. IF you fail to do this, you will NOT get a discharge.