Chapter 7 Bankruptcy Attorney Seattle

How a Chapter 7 Bankruptcy Works

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Law Offices of Mark McClure
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How a Chapter 7 Bankruptcy Works

A case of Chapter 7 starts with a debtor going to file the petition with the court of bankruptcy serving the place where that individual resides or where a debtor of the business has its main business place or assets that are principal or is organized. Also, the debtor has to court file: the schedules of liabilities and assets; the schedule of expenditures and current income; a financial affairs statement; and a schedule of unexpired leases and executory contracts. Debtors have to also give the trustee of the assigned case transcripts for the latest tax year in addition to tax returns that are filed in conjunction with the case furnish a copy of the return. Individuals that are debtors with mostly debts have more filing of document requirements. They have to file: the certificate of the counseling of credit and a copy of any plan of the repayment of debt created through the counseling of credit; evidence of employer payments, acquired 60 days from before filing; a statement of income (net monthly) and any increase (anticipated) in expenses or income after the file; and the record of all interest a debtor will have in state of federal qualified tuition or education accounts. A wife and husband can file individual petitions or one joint petition. wife and husband are held to all of the requirements of document filing of debtors that are individuals even for joint filing.

The court has to charge a filing fee of 245 dollars, a fee for miscellaneous administrative expenses that total 75 dollars, and a trustee surcharge that totals 15 dollars. Usually, these fees have to be paid to a court clerk on filing. With permission of the court, however, debtors that are individuals have the option of paying in installments. The amounts of installments are capped to four, and a debtor has to make a final installment 120 days or sooner after filing a petition. For a shown cause, the court can lengthen a time of an installment, given that the installment last paid is paid 180 days or sooner after filing for a petition. A debtor can also take a$15 trustee surcharge fee and a $75 for administrative costs by installments. If there is a file for the joint petition, one filing fee, one trustee surcharge fee, and one administrative fee are charged once, not twice. Debtors should know that not paying the fees could result in the case's dismissal.

If the income of the debtor is not more than 150% from the level of poverty, and a debtor is not able to pay off the fees of chapter 7, even when broken down into installments, a court has the option of waiving fee requirement.

To finish the forms of bankruptcy that comprise of the petition, schedules, and financial affairs statements, the debtor has to give this list of information:
  1. All of the creditors and the claim's amount and nature
  2. The amount, source, and frequency of an income of the debtor
  3. All property of the debtor
  4. An extensive list of living expenses that is monthly of the debtor, i.e., clothing, food, utilities, shelter, taxes, medicine, transportation, etc
Individuals who are married have to get these pieces of info for the spouse irrespective of individual petitions that are filed, a petition that is joint, or a single individual petition. In situations where the file is one spouse only, the expenses and income of the spouse that is not filing is mandatory so the trustee, court, and the creditors can look at the financial position of the household.

Out the different schedules that the debtor that is an individual shall file, a schedule that is of property that is exempt exists. The Code of Bankruptcy lets an individual debtor safeguard certain property from the creditors' claims due to the fact that it is exempt under the law of federal bankruptcy or under the debtor's home state laws. Lots states made use of a provision to their advantage in the Code of Bankruptcy that lets every state adopt its unique law of exemption to substitute for the federal exemption. For other jurisdictions, the individual debtor can choose from a package of federal exemptions or the state law exemptions. Therefore, whether or not some property is exempt is quite often determined by state law. The debtor is advised to talk to an attorney to find out the available exemptions in the state where the debtor resides.

Filing for a chapter 7 stops most actions of collection against the debtor's property or the debtor. However, the petition filing doesn't stop certain actions listed under section 362(b) and the filing could only be effective for a short time. The chapter 7 stop comes about by the law and needs no action from the judiciary. For as long as the chapter 6 stop is on, creditors usually can't continue or initiate lawsuits, phone calls, or even wage garnishments for payments. The clerk of bankruptcy gives a notice of the case of bankruptcy to the creditors whose addresses and names are given by the debtor.

Between twenty-one and forty days after the filing of the petition, the trustee of the case holds a creditors' meeting. If the administrator of bankruptcy or U.S. trustee schedules the meeting in a location that doesn't have regular administrator of bankruptcy or U.S. trustee staffing, the meeting can be held for 60 days or less after the relief order. While the meeting is going on, the trustee has the debtor put under oath, and both the creditors and trustee can ask questions. The debtor has to answer questions about the financial affairs and property of the debtor and come to the meeting. If a wife and husband filed for a joint petition, they have to both go to the meeting of the creditors and respond to questions. In 10 days or less of the meeting of the creditors, the U.S. trustee will detail to court whether or not the case should be considered, using the means test, an abuse detailed in section 704(b).

It is vital for the debtor to give any records relating to financials or documents requested by the trustee and to collaborate with the trustee. The Code of Bankruptcy makes it mandatory the trustee ask questions of the debtor at the creditors' meeting to make sure that the debtor knows of what can happen to that of those who seek a bankruptcy discharge such as negative credit history effects, the option to have a petition filed under another chapter, the effect of getting a discharge, and the effect of having a debt reaffirmed. There are trustees that have written information on the topics before or at the meeting to make sure that the debtor knows of this information. So that independent judgment is preserved, bankruptcy judges are not allowed to attend the creditors' meeting.

In order to give the debtor relief completely, the Code of Bankruptcy lets the debtor change a chapter 7 case to a chapter 11, 12, or 13 so long as the debtor has eligibility to become a debtor under the chapter to be changed to. However, one condition of the voluntary conversion of the debtor is that the case was not previously changed from another chapter to chapter 7. Therefore, the debtor is not allowed to change the case from one chapter to the next over and over.

Chapter 7 Background Chapter 7 Background
A Chapter 7 bankruptcy enables individuals to use assests to pay off your debt. Your home may be excempt
Chapter 7 Eligibility Chapter 7 Eligibility
Any individual, partnership, corporation or other business entity is eligible whether solvent or insolvent
Role of the Case Trustee Role of the Case Trustee
The role of a chapter 7 trustee is to liquidate nonexempt assets, or file a no asset report
Chapter 7 Discharge Chapter 7 Discharge
A discharge releases you from personal liability for most debts and prevents any collection actions


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1200 Westlake Ave N #1006, Seattle, WA 98109 ★ Phone: (206) 789-8751
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