What is Chapter 7 Bankruptcy?

No doubt if you are encountering financial difficulties and your debt is just rising by the month, you must have contemplated filing for bankruptcy protection. The most "popular" choice is to file for Chapter 7 bankruptcy. Chapter 7 bankruptcy is named such because it is chapter 7 under the bankruptcy law. Chapter 7 is synonymous with liquidation or straight bankruptcy. It is also named liquidation bankruptcy because your assets can be repossessed and sold off to fulfill the debt obligation to the creditors. Exactly what is involved in a Chapter 7 bankruptcy filing?

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A good bankruptcy attorney goes a long way

Since bankruptcy is so complicated, it should not be taken nonchalantly. Bankruptcy is a life changing event and it should be undertaken with caution and under the advisement of professional bankruptcy lawyer. There are many DIY sites such as nolo.com that can provide you with the necessary forms to apply for bankruptcy. But in all honesty, do you trust such a significant in your life to some software or some DIY forms? It is possible for you to do the filing yourself and risk losing something in the process because you just didn't know about it. If you want to do it right, make sure you get a bankruptcy attorney who can represent you the best and help you keep your assets post bankruptcy process.

Obtain credit counseling

As part of the bankruptcy law, you are required to attend credit counseling classes. Many state approved credit counseling outfits have classroom training or online sessions. The goal of the credit counseling is to school the filers so that they become financially responsible. The credit counseling course is comprised of 2 sessions, one is taken pre-bankruptcy and the other is taken post bankruptcy. The hope is that after you have attended the credit counseling course, you will become smart about your money and never go down the path of bankruptcy in the future.

File bankruptcy petition

In order to file for bankruptcy, you will need to submit your bankruptcy petition to the bankruptcy court in the state you are living in. The petition has a lot of bankruptcy particular forms and supporting documents such as tax return, pay stubs, bank statements, credit card statements and more.

Be granted the automatic stay

Your creditors will be notified of your intention for default once you have filed your petition with the bankruptcy court. Once the petition is filed, you will be given the automatic stay stature. Automatic stay means that the creditors are not allowed to contact you or harass you for the payment of the debt until it is resolved in the bankruptcy court.

Attend 341 meeting

341 meeting is sometimes also called the meeting with the creditors. This meeting is attended by yourself, a bankruptcy trustee, and possibly your creditors. The first thing that will happen in the 341 meeting is that the bankruptcy trustee will ask you to verify the petition that has been prepared by you and your attorney. The bankruptcy trustee's job is to make sure that the data presented in the petition is precisely represented. If any creditor you have listed in your bankruptcy petition appears in the 341 meeting, it normally means that the creditor is there to contest your bankruptcy discharge, and that the debt you have incurred with the creditor should be paid for. Most of the time, no creditors show up at the 341 meeting because they have the option to contest your bankruptcy discharge post the 341 meeting.

Final stage - get your bankruptcy discharge

After your 341 meeting, this is the part of the waiting game, where you will be waiting for your bankruptcy discharge papers, also considered the end of your bankruptcy process. If and when you receive your bankruptcy discharge paperwork, it means that you have successfully completed the bankruptcy petition. In the case of your unsecured debt, the bankruptcy discharge papers effectively eliminated the debt, and the creditors cannot pursue you in the future for the repayment. Bankruptcy discharge handles the secured debt in an atypical manner depending on how the assets were classified as exempt or not. This is really a question for your bankruptcy lawyer if you have one.

As you have probably concluded by now, filing for Chapter 7 bankruptcy is not an easy thing to do. It requires a lot of paperwork and bankruptcy knowledge to obtain a successful bankruptcy discharge. Filing bankruptcy is not something you should just pick up a book and try to do it yourself. Get in touch with a professional bankruptcy attorney who will be able to aid you with a successful filing. Bankruptcy should be a one in a lifetime affair and you should not attempt to do it yourself and risk jeopardizing the outcome.

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