Chapter 7 Bankruptcy Answers

: Chris Lee Law Firm

  Filed under: Chapter 7

When you are considering bankruptcy, it is good to know a little about the legal actions you are about to take. If you know a bit about what to expect, the whole process will be less intimidating.

Chapter 7 bankruptcy is the quickest and easiest form of bankruptcy. The cases are usually straightforward unless a creditor objects to a discharge of debt. Any individual that lives in the United States or has a business or property in the U.S. can file bankruptcy.

Before you file your paperwork with the court, you must attend a court-approved credit counseling course and submit those papers to the court with your bankruptcy petition. When your documents are submitted, an automatic stay will go into effect.

Automatic Stay

The automatic stay is legal protection prohibiting all attempts to collect a debt from you. Your creditors will not be allowed to call, seize any property, or proceed with any legal action against you while your bankruptcy case is open. If you have any wage garnishments, those will also stop during the process. If a creditor violates this right and attempts to contact you regarding a debt, you can seek damages against them for violating the stay.


A court-appointed trustee will be assigned to your case. Their main task is to represent the interests of your creditors. The trustee will collect any non-exempt property that can be sold and distributes the proceeds to your creditors. Most of your property will be exempt so you may lose little to no property.

Meeting of the Creditors

This meeting usually takes place approximately 30 days after filing your bankruptcy paperwork. The trustee will have had a chance to look over your documents and examine your financial affairs. You, your spouse, if you are filing jointly, your lawyer and the trustee will meet informally somewhere, usually outside of the courthouse. Creditors rarely attend this meeting, unless they have an objection to a debt you are attempting to eliminate. This meeting will last anywhere from a few minutes to half an hour.


If the trustee finds a non-exempt property that can be sold to satisfy the creditors, you will be offered the option of paying the non-exempt value to the trustee in cash instead of turning over the assets. The value will be set at what it is worth now, and not when you paid for it. You can object to any proposed sale of your assets.

Secured property can either be surrendered, paid in full the value of the property, or reaffirmed the debt with the creditor to protect the collateral and allow you to keep it and continue payments.

A Second Credit Course

Before your bankruptcy case can be discharged, you must attend a second credit counseling course. This course is intended to teach you to manage your finances in a way to keep you out of future bankruptcy court.

Discharge of Debt

If there are no objections from your creditors, your bankruptcy case will be discharged without a hearing. You will no longer be legally obligated to pay on any of the debt listed in your paperwork.

If you would like more information on bankruptcy, contact a Plano bankruptcy attorney today.

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