The Basics Of Filing Chapter 7 Bankruptcy
In this article, you will learn…
- How filing bankruptcy under Chapter 7 affects pending lawsuits,
- What a creditor’s meeting is, and
- How a bankruptcy attorney can help you through bankruptcy.
How Does Filing Bankruptcy Under Chapter 7 Affect Lawsuits And Liens?
Filing bankruptcy under Chapter 7 affects lawsuits and attachments by preventing any further action against the debtor. There is an automatic stay related to the filing of bankruptcy, so state lawsuits are put on hold and the court in the state can’t take any additional action against the debtor without permission from the court.
Liens that are in existence prior to the bankruptcy filing can pass through and still be in existence after the filing. The reality of what happens to a lien upon the filing of a Chapter 7 bankruptcy can get somewhat complicated, though. You would need to speak with your bankruptcy attorney to determine whether or not that lien is still in existence after the filing.
When Must A Person Go To Court In A Chapter 7 Case And What Happens There?
A person very seldom has to appear in court in a Chapter 7 bankruptcy case. However, there is always what’s known as a creditor’s meeting or a Section 341 meeting.
The creditor’s meeting is when the debtor attends a meeting with their creditors to discuss the bankruptcy. These meetings are usually held in person but have, since COVID, been held by telephone. The creditor’s meeting is about five minutes long and they are very simple and straightforward.
Who Is A Trustee In A Chapter 7 Case And What Does He Do?
The role of the Chapter 7 trustee is to determine whether or not the debtor has any non-exempt assets. If there are non-exempt assets, the trustee would take possession of those assets and sell them to pay the money to unsecured creditors.
Typically, 95% or more of all Chapter 7 filings are no-asset cases, which means that there are no non-exempt assets.
What Are The Debtor’s Responsibility To The Trustee?
The debtor must provide the required documents to the trustee which will allow the trustee to make a determination as to non-exempt assets and to verify other financial information required under the bankruptcy code.
What Do Creditors With Mortgages Against The Debtor’s Property Do In A Chapter 7 Case?
The debtor can do one of three things with respect to real estate in a Chapter 7 case. These options are…
- Surrender the property in full satisfaction of the debt,
- Redeem the property by paying it off, or
- Sign a reaffirmation agreement and keep paying the mortgage according to the contract.
The overwhelming majority of Chapter 7 debtors choose to sign a reaffirmation agreement and continue to make their payments in accordance with their contract with the mortgage company.
How Is A Debtor Notified That Their Discharge Has Been Granted?
A debtor is notified that their discharge has been granted by the court. The court enters an order of discharge approximately 90 days after the bankruptcy is filed and that order is provided to all creditors and the debtor.
Is Filing Under Chapter 7 Bankruptcy Worse For Your Credit Than A Chapter 13?
A Chapter 7 bankruptcy isn’t worse on a debtor’s credit than following a Chapter 13. In many ways, Chapter 7 has the advantage of granting the debtor a discharge much faster than in a Chapter 13 bankruptcy. This means that the debtor can start rebuilding their credit more quickly.
What Is The Role Of An Attorney For A Debtor In A Chapter 7 Case?
The role of an attorney for a debtor in a Chapter 7 case is to…
- Prepare all documents required for filing,
- Handle all document production to the Chapter 7 trustee, and
- Complete all necessary items for the debtor to receive an order of discharge.
For more information on Filing A Chapter 7 Bankruptcy In Texas, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (888) 402-5557 today.
