Eligibility

To qualify for relief under chapter 7 of the Bankruptcy Code, the debtor may be an individual, a partnership, or a corporation or other business entity. 11 U.S.C. §§ 101(41), 109(b). Subject to a “means test” relief is available under chapter 7 irrespective of the amount of the debtor's debts or whether the debtor is solvent or insolvent.

No individual may be a debtor under chapter 7 or any chapter of the Bankruptcy Code unless he or she has, within 180 days before filing, received credit counseling from an approved credit counseling agency either in an individual or group briefing. 11 U.S.C. §§ 109, 111.

One of the primary purposes of bankruptcy is to discharge certain debts to give an honest individual debtor a "fresh start." The debtor has no liability for discharged debts. Although an individual chapter 7 case usually results in a discharge of debts, the right to a discharge is not absolute, and some types of debts are not discharged. Moreover, a bankruptcy discharge does not extinguish a lien on property.

How It Works

The debtor, through his or her attorney, must file with the court: (1) schedules of assets and liabilities; (2) a schedule of current income and expenditures; (3) a statement of financial affairs; and (4) a schedule of executory contracts and unexpired leases. Fed. R. Bankr. P. 1007(b). Debtors must also provide a copy of the tax return or transcripts for the most recent tax year as well as tax returns filed during the case (including tax returns for prior years that had not been filed when the case began). 11 U.S.C. § 521. Individual debtors with primarily consumer debts have additional document filing requirements. They must file: a certificate of credit counseling and a copy of any debt repayment plan developed through credit counseling; evidence of payment from employers, if any, received 60 days before filing; a statement of monthly net income and any anticipated increase in income or expenses after filing; and a record of any interest the debtor has in federal or state qualified education or tuition accounts. Id.

The courts charge a $299 filing fee to the Debtor. Normally, the fees must be paid to the clerk of the court upon filing.

In order to complete the Official Bankruptcy Forms that make up the petition, statement of financial affairs, and schedules, the debtor must provide the following information:

      1. A list of all creditors and the amount and nature of their claims;

      2. The source, amount, and frequency of the debtor's income;

      3. A list of all of the debtor's property; and

      4. A detailed list of the debtor's monthly living expenses, i.e., food, clothing, shelter, utilities, taxes, transportation, medicine, etc.

 Filing a petition under chapter 7 "automatically stays" (stops) most collection actions against the debtor or the debtor's property. 11 U.S.C. § 362. But filing the petition does not stay certain types of actions listed under 11 U.S.C. § 362(b), and the stay may be effective only for a short time in some situations. The stay arises by operation of law and requires no judicial action. As long as the stay is in effect, creditors generally may not initiate or continue lawsuits, wage garnishments, or even telephone calls demanding payments. The bankruptcy clerk gives notice of the bankruptcy case to all creditors whose names and addresses are provided by the debtor.

Between 20 and 40 days after the petition is filed, the case trustee (described below) will hold a meeting of creditors. The debtor must attend the meeting and answer questions regarding the debtor's financial affairs and property. 11 U.S.C. § 343. If a husband and wife have filed a joint petition, they both must attend the creditors' meeting and answer questions. It is important for the debtor to cooperate with the trustee and to provide any financial records or documents that the trustee requests.

Discharge

A discharge releases individual debtors from personal liability for most debts and prevents the creditors owed those debts from taking any collection actions against the debtor

Considering Bankruptcy? Call

Paul Benson 801 627-1323

Chapter 7

• Are you being hounded by creditors?
• Are you behind on your mortgage and feel like you are never going to be able to catch up?
• Are you afraid your landlord will evict you if you file for personal bankruptcy?

If you have any questions or concerns about personal bankruptcy, please contact the Paul Benson today. Call 801 627-1323 to schedule a free consultation.

Chapter 7 bankruptcy is only one of several bankruptcy options available to individuals. It is called "liquidation" bankruptcy because some of the debtor's property is "liquidated" or sold to pay down his or her debt. It is important to know that if you decide to file for this option you will not automatically lose your home, your car, your pension or your important household items.

Please note that people who file for Chapter 7 bankruptcy must meet certain income qualifications and must also attend credit counseling sessions from an approved agency prior to filing.



Call an Ogden Utah Bankruptcy Attorney for help