What Happens When I File for Chapter 7 Bankruptcy?
Do you find yourself in a financial bind with a lot of debt? Are you falling behind on paying your bills? A Chapter 7 bankruptcy may be a solution for you. A Chapter 7 bankruptcy can clear away, or discharge, your unsecured debts, with a few exceptions.
After you file for Chapter 7 bankruptcy, the Court places an Automatic Stay on your current debts. This means that your creditors must stop all collection activity. The Automatic Stay prevents your creditors from garnishing your wages, prevents them from calling/mailing you to collect money, prevents them from foreclosing on your home or evicting you, prevents them from repossessing your property, etcetera.
A Chapter 7 bankruptcy is also known as a liquidation bankruptcy. After filing for Chapter 7 bankruptcy, a bankruptcy Trustee is appointed. You will then be given a court date, called a 341 Meeting, where you will meet and speak with the bankruptcy Trustee, and any creditors that decide to attend. Creditors typically do not appear at these meetings.
The Chapter 7 Trustee’s job is to review your estate and oversee your bankruptcy case. The Trustee will look to see if you have any property to sell. This is called nonexempt property. The Trustee will then use the proceeds to repay your creditors. However, it is possible to file Chapter 7 case and not lose any property! To do this, you MUST properly claim your §1C-1601 exemptions in Schedule C. Exemptions allow you keep property below a certain equity limit. An experienced bankruptcy lawyer will know how to properly use the §1C-1601 exemptions to best protect your property.
Today, most Chapter 7 bankruptcy cases are “no asset” cases. This means that the person does not lose any property and at the same time, their debt is cleared away, or discharged. Chapter 7 cases, on average, take about four to six months before your debts are discharged and the case is closed.
Before you file, you should consult an experienced bankruptcy lawyer. Our North Carolina bankruptcy lawyer is here to help you! Contact the Neumann Law Firm, PLLC. for a FREE consultation! 828-884-6575.
Brentley D. Cronquist, Bankruptcy Counsel