The Procedures Involved with Filing Chapter 7
Chapter 7 Bankruptcy is a procedure that is quite easy and is considered by lawyers to be a quick solution to resolving debts. This clearing of debts is available to all individuals, married couples and businesses in the United States. The process usually has trustees being hired by a judge overseeing the proceedings to gather pertinent information regarding all assets owned by the debtor in question. From that point, the trustee in will list all assets he determines to be non-exempt for selling purposes. The property is then sold off at auctions and private listings and the money earned from all sales is used to pay off unsettled debts to all creditors involved in the hearing.
Exempt property varies quite a bit in courts across the country. Bankruptcy laws also stop clients filing for chapter 7 to move to another state to claim a wider list of exemptions during the bankruptcy litigations that are about to go through. Some specifics that can be found on the exempt list include homes, automobiles and social security benefits paid by the United States. Chapter 7 bankruptcies usually come through as no asset bankruptcy proceedings with the client having nothing to their name to protect. This is very specific to each case and needs to be translated to the trustee immediately before proceedings start rolling forward.
Most Chapter 7 proceedings usually do not begin until the individual and or business goes through a means test to verify qualification for bankruptcy. This test, run by the government, extensively reviews all incomes and expenses that the debtor filing has or is earning on a monthly basis. This information is then compared with the median standards set for the state in question by the Internal Revenue Service.
More often than naught, a single person or a married couple can file successfully for Chapter 7 if their total household income is less then the median for the state. If the income turns out to be greater than the median, the judge will in turn dismiss the case and inform the filing party to look into the process of a payment plan usually set in place by the filing of a Chapter 13 bankruptcy.
Chapter 7 bankruptcy begins with the official filing by a lawyer stating your financial means at this time and your reasons for requesting bankruptcy protection. A documented list will also be submitted detailing the amounts owed to creditors, all of your property listed as both exempt and non exempt and your current financial income and status at the point of filing. The moment the motion is filed for bankruptcy by your lawyer, all creditors have no access to contact or collect money from you and any normal monthly payments are frozen pending the outcome of your hearing.
If there is nonexempt property listed, the trustee appointed by the court hearing your case will take complete ownership of all belongings listed. The court appointed trustee will then sell what can be sold of the assets on hand and provide all of these final tallies to the judge presiding. The money will then be divided accordingly with fees first being paid to the trustee along with other court costs. The amount remaining will then be used as payments towards the creditors with claims listed within your original statement. Once the money has been used, the rest of your debts with then be relinquished by the court system and you will have a new slate to start from that is clean and debt free.
