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WHAT IS CHAPTER 7 BANKRUPTCY?
Chapter 7 Bankruptcy and Chapter 13 are legal proceedings that are available to a person to cope with a financial crisis. One of the main purposes of bankruptcy legislation is to afford the opportunity to a person, who is hopelessly burdened with debt, to free himself of the debt and start fresh - "a new lease on life."

WILL MY CREDITORS STOP HARASSING ME?
Yes, they will! By law, all actions against a debtor must cease once the documents are filed. Creditors cannot initiate or continue any lawsuits, wage garnishees, or even telephone calls demanding payments. Secured creditors such as banks holding, for example, a lien on a car, will get the stay lifted if you cannot make payments.


WILL MY SPOUSE BE AFFECTED?
Your wife or husband will not be affected by your bankruptcy if they are not responsible (did not sign an agreement or contract) for any of your debt. If they have a supplemental credit card they are probably responsible for that debt.


WHO WILL KNOW?
Bankruptcy filings are public records. However, under normal circumstances, no one will know you went bankrupt. The Credit Bureaus will record your bankruptcy and it will remain on your credit record for 10 years.


WHAT ARE THE MOST COMMON REASONS FOR A CHAPTER 7 BANKRUPTCY?
The most common reasons for filing bankruptcy are:


Unemployment:
Large medical expenses;
Seriously overextended credit;
Marital problems, and;
Other large unexpected expenses.


CAN I KEEP ANY CREDIT CARDS?
Whether a debtor keeps credit cards after filing bankruptcy is up to the credit card company. If you are discharging a credit card they will cancel the card unless you reaffirm the debt. Even if you have a zero balance the credit card company might cancel the card.


WILL I EVER GET CREDIT AGAIN?
Yes! A number of banks now offer "secured" credit cards where a debtor puts up a certain amount of money (as little as $200) in an account at the bank to guarantee payment. Usually the credit limit is equal to the security given and is increased as the debtor proves his or her ability to pay the debt.

Two years after a bankruptcy discharge, debtors are eligible for mortgage loans on terms as good as those of others, with the same financial profile, who have not filed bankruptcy. The size of your down payment and the stability of your income will be much more important than the fact you filed bankruptcy in the past.

The fact you filed bankruptcy stays on your credit report for 10 years. It becomes less significant the further in the past the bankruptcy is. The truth is, that you are probably a better credit risk after bankruptcy than before.


CAN MY BOSS FIRE ME FOR FILING BANKRUPTCY?
No. U.S.C. Sec. 525, prohibits any employer from discriminating against you because you filed bankruptcy.



WHAT DON'T I KEEP?
In a bankruptcy, assets in excess of your allowed personal exemption, or non exempt assets such as, real estate, automobiles and boats will be liquidated by the trustee.


I WAS BANKRUPT BEFORE. WHEN CAN I FILE AGAIN?


A person can file Chapter 7 again if it has been more that 6 years since he or she was discharged from the previous Chapter 7 bankruptcy. Also refer to: Chapter 13.


HOW DO I GO INTO BANKRUPTCY?
There are two ways a person can become a bankrupt. The first and more common way is to have the person file a petition to voluntarily go bankrupt.

The second, and rarely used way, is for creditors to ask the Court to make an Order that a person is bankrupt. In both these cases a Bankruptcy Trustee is required to administer the bankruptcy.


DO I HAVE TO USE A LAWYER TO GO BANKRUPT.
No. You do not need to use a lawyer to file Chapter 7 yourself or Chapter 13.

However, we advise that you use the services of an experienced bankruptcy attorney as bankruptcy is complex. A bankruptcy lawyer is well worth the cost. You will save the cost of the legal fees many times over through peace of mind, release of stress and probably actual money saved in following your bankruptcy attorney's advice.


WHAT ARE THE KEY OR MAJOR EVENTS IN THE BANKRUPTCY PROCESS AND WHEN WILL THE BANKRUPTCY BE OVER?
Day #1
The Bankruptcy documents are filed with the Bankruptcy Court.
There is an immediate stay so that most actions by creditor are prevented, wages cannot be garnisheed, legal actions cannot be continued.

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Day #14
Creditors are advised by the clerk that a petition has been filed.

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Day #20-#40
A Meeting of Creditors is held at the Court ("The 341 meeting").
The debtor must attend this meeting. Creditors can attend but usually do not attend the meeting. If they attend they usually only have a few minutes to ask questions.

The trustee assigned to the case presides. The meeting is either tape recorded or recorded by a court reporter. The trustee asks you questions under oath such as:

Did you read the schedules before signing?
Did you list all of your assets?
Did you list all of your debts?
Are the schedules accurate?
Do you want to make any corrections to the schedules?
Are your cars insured?
Have you destroyed your credit cards?
The trustee either orally, or by giving the debtor written information, will ensure that the debtor is aware of:


The effect on credit history; the effect of receiving a discharge; the effect of reaffirming a debt; the ability to file a petition under a different chapter.

Note: The typical 341 meeting lasts about 4 to 5 minutes.

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Day #20-30 and After
The trustee will sell any nonexempt assets available for the benefit of the creditors.
The trustee has the authority to:

pursue causes of action (lawsuits belonging to the debtor;
set aside preferential transfers made to creditors within 90 days before the petition;
undo security interests and other pre-petition transfers of property that were not properly perfected.

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Day #90 (after the 341 meeting)
Unsecured creditors must have filed their claims.

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Day #60-#90 (after the 341 meeting)
The debtor is discharged and all debts (with some exceptions) are written off.

More than 99% of the bankrupts are discharged.