What Happens during Chapter 7 Bankruptcy

A Chapter 7 bankruptcy can be finished very quickly, usually in four to six months.

 

The first thing you will do is to meet with your attorney to ensure that all of your assets are exempt or protected. This will give you the assurance you need that all of your property is protected. In some rare cases, people may have some assets that are non-exempt, such as a CD, and the attorney can turn that over to the bankruptcy trustee, who will distribute it equally among your creditors. A case with no non-exempt assets is known as a no-asset case; 99 percent of bankruptcies are of this type.

 

When you meet with your attorney, be honest and disclose all property! He or she can help you best if you describe everything in detail. Once this is completed, the case is filed.

 

Note: If you have property you want to keep, such as a house or car, you have the option to continue to pay on it or not pay and return the property. If you want to pay the debt and give the creditor permission to work with you, you enter a reaffirmation agreement. If you have every intention of keeping the property and want to work with the creditor after the discharge, it's a good idea to enter this reaffirmation agreement.

 

The Bankruptcy Attorney

Your lawyer will be your new best friend during the bankruptcy period. She or he will be the person to tell you what to expect, how to act, and what to do. After wisely choosing your attorney, put your trust in this person and do as he or she says. He or she will run interference between you and the trustee and will answer all of your questions. If a debtor tries to contact you, your attorney is the person to handle it. The attorney is your advocate and your key to being successful throughout your case.

 

Final Steps to Take During Bankruptcy

You must attend your creditors meeting, complete all payments, and attend the debtor education course. Once all of these steps have been completed, the discharge is issued and you can get on with your life-it's a fresh start!

 

Financial Survival during Chapter 7 Bankruptcy

Chapter 7 bankruptcy has always been a way for individuals struggling with debt to find a light at the end of the tunnel. In recent years, bankruptcy trustees also have expressed interest in helping debtors learn the skills they need to avoid ending up back in bankruptcy court.

 

Bankruptcy as a Form of Relief/Punishment

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 made it harder for debtors to choose Chapter 7 bankruptcy as an option by requiring that they meet certain minimum qualifications to file. This new design was intended to help consumers learn how to manage their money to avoid the need to seek bankruptcy as an alternative in the future. The idea is that, although bankruptcy is a legal and viable alternative that offers relief for people struggling with insurmountable debt, it is not a way of life and should be used only when absolutely necessary. The ability to manage money during tough economic times is a skill that can help bankruptcy filers prevent having to repeat the process.

 

How Will I Learn to Mange Money?

Now that you have filed for bankruptcy, you will receive counsel from your attorney, who will go over with you how to create a budget and how to live on a cash basis. Your attorney knows you did not want to have to resolve your issues by filing bankruptcy, so he or she will give you the tools to make sure that when you get out of bankruptcy you won't be relying on credit again. Many people, because of things that have happened to them, have to charge necessities such as gas, food, and utilities. An attorney will wipe out your debt and then show you a new way to live. He or she will analyze how much money you make and then teach you have to live on cash basis. This is the number one way to reestablish yourself!

 

Why stay away from credit cards? Even though you charge something and intend to pay when the bill comes, some things can be out of your control and you may end up not being able to pay. Instead, you'll learn to pay for things with cash if you have the option because if you lose your job or some other unforeseen event strikes you and your family, you don't have debt to worry about and you will have savings set aside.

 

Spending less, saving more-it's a great philosophy.