Do You Have Chapter 7 Bankruptcy Questions?
Your Chapter 7 Bankruptcy FAQs Answered Here
The reasons a person files for bankruptcy are as many and varied as they are complicated. Take heart in knowing that, even in such extenuating circumstances, you still have legal options. If you go through the Chapter 7 bankruptcy process, then an experienced bankruptcy attorney from Sader Law Firm can make sure you have assets left over to start a new life.
The professional bankruptcy lawyers at our local Missouri law office have over three decades of collective experience between them. They have been ensuring that their fellow Missourians are protected when filing for Chapter 7 bankruptcy since our founder and managing member, Neil Sader, opened the doors to our Kansas City bankruptcy law firm. Neil and his dedicated team of bankruptcy attorneys take pride in offering personalized service that makes a positive difference in every client’s situation. They are always here to answer any of your Chapter 7 bankruptcy questions.
Frequently Asked Questions About Chapter 7 Bankruptcy
The following are some of the most commonly asked Chapter 7 bankruptcy questions that the bankruptcy attorneys at Sader Law Firm have been asked during cases:
- What is Chapter 7 bankruptcy?
- Who cannot file Chapter 7?
- How do I qualify for Chapter 7 bankruptcy?
- Will I lose my property if I file for Chapter 7?
- What happens if my property is considered non-exempt?
- How are secured debts treated in Chapter 7 bankruptcy proceedings?
- Do any debts survive the Chapter 7 bankruptcy process?
- Will filing for bankruptcy help if I am being sued?
- Will filing for Chapter 7 bankruptcy stop wage garnishment?
- How long does the Chapter 7 bankruptcy process take?
What Is Chapter 7 Bankruptcy?
Often referred to as “liquidation” bankruptcy, Chapter 7 bankruptcy exists to help debtors gain control over their lives again. Once approved, most of your debts will be expunged from your record and all of your non-exempt property will be given to a trustee. The trustee will then attempt to sell that property in an attempt to recover some of the original debt owed.
Who CANNOT File Chapter 7?
Typically, if you have enough income to repay your debts, a judge can dismiss your Chapter 7 claim and you will have to file for Chapter 13 bankruptcy. An applicant for Chapter 7 must have an income below a certain level. If your income amount is above that level, then you may have the opportunity to take a “means test” in order to still qualify.
Further, a judge will most likely reject your Chapter 7 bankruptcy application if you have a previously filed for bankruptcy within 180 days and were denied. The court will also dismiss your case if it believes that you are filing bankruptcy for fraudulent purposes, such as scamming creditors.
How Do I Qualify for Chapter 7 Bankruptcy?
Before Congress amended the laws pertaining to filing for bankruptcy in 2005, a judge held all the power to approve or deny an applicant’s bankruptcy claim. Now there are specific rules and criteria in place concerning how relevant parties can best determine a debtor’s claim. For example, one of the new criteria involves more detailed and strict rules about who is eligible to qualify for Chapter 7 bankruptcy. Ultimately, these amendments have indeed made it harder for applicants to qualify and receive approval for a bankruptcy claim.
Will I Lose My Property if I File for Chapter 7?
Chapter 7 bankruptcy is also known as a “liquidation proceeding”. This means that you are allowed to keep property and assets as long as the fair market value of each item does not exceed the exemption amount for the state in which you reside. These rules can change from state to state however. In Missouri and Kansas, for example, both states uphold laws which allow many household items to be considered exempt in bankruptcy proceedings, including the property itself. If your property exceeds the state’s exemption amount, you will be allowed to buy back the property, or the Chapter 7 bankruptcy trustee will auction the property and distribute the proceeds to your unsecured creditors. An experienced bankruptcy lawyer can help you determine what property and assets you can protect when filing for Chapter 7.
What Happens If My Property Is Considered Non-Exempt?
If a bankruptcy trustee deems that your property is not exempt from bankruptcy proceedings, you may be forced to surrender the property in question or otherwise pay what you owe for it in cash. If you are filing for bankruptcy, however, chances are that you do not have the funds to do the latter and will have to surrender the property. That being said, there are cases where the trustee determines that the otherwise non-exempt property is not worth enough to go through the bankruptcy process. If this happens, then an applicant will likely be allowed to keep the property.
How Are Secured Debts Treated in Chapter 7 Bankruptcy Proceedings?
Property — such as a house or car — that has been put up as collateral for a loan, is called a “secured debt”. When a person falls behind on payments for that property, a bankruptcy trustee has the right to re-possess and/or foreclose on all applicable property. If you are current on your payments, however, then you are allowed to keep the property and continue making payments on it.
Do Any Debts Survive the Chapter 7 Bankruptcy Process?
Yes. Typically, when you have been approved for Chapter 7 bankruptcy, all of your debts are expunged with the exception of the following:
- Child support
- Owed taxes (“tax debts”)
- Student loans
- Creditor-disputed debts (for example, if it has been proven that you have committed fraudulent/malicious acts resulting in the debt, then that debt may survive the bankruptcy filing if the creditor objects to them being exempt.)
Will Filing for Bankruptcy Help If I Am Being Sued?
Yes, it can. If a creditor, landlord or other individual/company is suing you, you can stop the lawsuit from proceeding by filing for any kind of bankruptcy. Any associated legal proceedings cannot continue unless permission is obtained from the bankruptcy court. If the debt you are being sued for is considered an “unsecured debt” (meaning it has not been used as collateral for a loan), then the suit will likely be dismissed entirely once you have filed for bankruptcy.
Will Filing for Chapter 7 Bankruptcy Stop Wage Garnishment?
If a creditor has garnished your wages as a way to receive funds they are owed, filing for Chapter 7 can halt most garnishments from being deducted from your paycheck. Note that any money already paid is considered applied to the debt and not recoverable. However, if it is discovered that your employer withheld wages but did not report it the creditor, then you may be eligible to recover those funds. An experienced bankruptcy attorney knows how to find and determine if an employer has committed this fraudulent act against you, potentially putting money back in your pocket.
How Long Does the Chapter 7 Bankruptcy Process Take?
When filing for bankruptcy, you must attend a “creditors meeting”. This meeting typically takes place around 30 days after filing. Debtors and their attorneys will attend this meeting to review paperwork and provide any further information needed by the creditor or trustee. If no complications arise, Chapter 7 bankruptcy cases can usually be filed and completed within 90-120 days.
Is Filing Chapter 7 Bankruptcy the Right Choice? Call Today to Discuss Your Options
This answer will vary depending on your specific case. The best way to determine if filing Chapter 7 bankruptcy is right for you is to consult with an attorney. One of our experienced bankruptcy attorneys can meet with you during a complimentary consultation to talk about your options. During this initial meeting, our talented bankruptcy lawyers will listen to the details of your case and provide legal advice.
Questions about filing for bankruptcy? Contact us online or call us at (816) 561 1818 to schedule your consultation today.