Chapter 7 Bankruptcy

The goal of a Chapter 7 bankruptcy case is to give you a "fresh start" in life by discharging most of your debts and allowing you to retain most (and oftentimes all) of your property. An order of discharge relieves you of all personal liability on any debts dischargeable under the Bankruptcy Code and prevents your creditors from trying to collect discharged debts. 

Stopping Your Creditors-The Automatic Stay

Once the bankruptcy petition is filed, you, your exempt property, and property of the bankruptcy estate are all protected by the automatic stay provisions of the Bankruptcy Code.  The automatic stay stops the pressure you feel from your creditors because it stops all collection efforts, all harassment, and all foreclosure actions.  The automatic stay prohibits your creditors from trying to collect your pre-petition debts.  A creditor who knowingly violates the stay may be held in contempt of court and required to pay your attorney fees.

Your Court Appearance-The Meeting of the Creditors

Between 20 and 40 days after your case is filed, you will be required to attend a meeting of the creditors at the Bankruptcy Court.  All creditors that you have listed on your petition will be notified of the meeting.  Your creditors will have the opportunity to present reasons why their debts should not be discharged.  However, in the routine case, your creditors seldom appear.  You are required to bring to the meeting a government issued photo ID such as your driver's license or passport and your social security card.  If you own a house, you are required to bring a copy of your deed and your most recent mortgage statement.  The Bankruptcy Trustee is not allowed to hold the meeting without these documents.  Plan on spending a few hours at the courthouse, although the actual meeting will only last approximately 10 minutes.  We will give you detailed instructions on how to prepare for the meeting. 
 

What you can keep-Exempt Property

Most people will not lose anything.  The Bankruptcy Code (and Michigan state law) provide generous exemptions that allow you to keep most or all of your property.  Generally, up to a certain value, the Bankruptcy Code lets you keep your home, a car, your interest in retirement plans, and household goods including clothing, furniture, appliances, and the like.  If you have other property that you want to keep, you can reaffirm certain debts that will survive the general discharge.

Your "Fresh Start"

In the end, most individuals are discharged of their debts within 90 days.  This means that you do not need to pay these debts and your creditors will be off your back.

Conclusion

Chapter 7 Bankruptcy is a viable option for many individuals.  If you are considering filing for bankruptcy, you have to look at the economics of your decision.  Do you need the relief that a fresh start would provide?  Are the phone calls and letters from you creditors overwhelming you?  Are you prepared for the limitations on your credit that filing for bankruptcy would create?  In the end, it is a financial decision.  If you feel bankruptcy is an option for you, please contact us for a free evaluation of your case.