To qualify for a Chapter 7 Bankruptcy a debtor must initially pass the means test. The meams test requires that the debtor's income not be over an amount that is established by the statute. To start a Chapter Seven bankruptcy proceeding, you file a Petition for bankruptcy Protection with the Bankruptcy Court. You file your Petition with the Court that serves the state or the area where you live or where your primary assets are located. Along with the Petition, you file various lists called Schedules your assets, your debts, your current income and expenditures, and several other pieces of information. The Court charges three hundred- and thirty-eight-dollars filing fee, although that fee could be waived or deferred in some cases.

Once your Petition is filed, most actions by your creditors are blocked or suspended by the Automatic Stay. The Automatic Stay is a bankruptcy-related restraining order that prohibits your creditors from collecting on most types of debts. Most creditors cannot start or continue lawsuits, foreclose on or repossess your assets, garnish your wages or financial accounts, or even make telephone calls to you. Your creditors are notified of the bankruptcy filing by the by the court clerk which is sort of a bankruptcy restraining order against your creditors.

generally held about a month your Petition is filed. You must attend the meeting. The hearing is conducted by the Trustee. The Trustee will ask you several questions about your financial affairs. Your creditors may also attend and are entitled to you questions about your financial affairs, although the creditors usually do not do so. The hearing usually lasts around ten minutes.

At the end of the Chapter Seven bankruptcy process, you should receive a discharge . The Court issues an Order eliminating your debts. From that point forward, you are no longer responsible for the discharged debts and your creditors are forever prohibited from taking any action against you.

You should be aware that not all debts are discharged or eliminated in Chapter Seven Bankruptcy. The laws related to what debts are discharged are complex. If you have any questions about whether your debts are dischargeable in Chapter Seven Bankruptcy, you should contact a bankruptcy attorney.

Qualifying for Chapter Seven: The Income Test

To qualify for a Chapter Seven Bankruptcy, you must pass the Chapter Seven Income Test , also known as the Means Test . The test is part of the bankruptcy paperwork submitted to the Court. The test considers your income and expenses over the prior six months and compares it to certain averages. If your income is too high, you may not be eligible to file for Chapter Seven bankruptcy protection.

Options: qualify for a Chapter Seven Bankruptcy, or if you decide that Chapter SSeven Bankruptcy is not a good option for you, you may consider.

Should I Use an Attorney to File for Bankruptcy?

Some people file a Chapter Seven Bankruptcy on his or her own, without the assistance of an attorney. However, this area of the law is complex and can be difficult to decipher. A poorly-executed Chapter Seven filing could result in a sale of your assets or your case could be dismissed. Therefore, we always recommend that you Seven bankruptcy petition on your own.

What is Chapter Seven Bankruptcy?

Chapter Seven bankruptcy is one of the many types of bankruptcy available to debtors under the United States Bankruptcy Code. Chapter Seven is designed for debtors in financial difficulty who do not have the ability to pay his or her existing debts. Debtors whose debts are primarily consumer debts are subject to a means test designed to determine whether the case should be permitted to proceed under chapter Seven. If the income of the debtor is greater than the median income for the

state of debtor’s state of residence and family size, in some cases, creditors have the right to file a motion requesting that the court dismiss your case under the bankruptcy law.

A debtor liquidates his or her non-exempt assets and receives a discharge from the United States Bankruptcy Court in a chapter Seven bankruptcy proceeding. A bankruptcy trustee may have the right to take possession of and sell property that is not exempt. The trustee uses the money from the sale of unprotected assets to pay creditors. Most consumer debtors are able to protect most of his or her assets in a chapter Seven bankruptcy.

The purpose of filing a chapter Seven bankruptcy is to obtain a discharge of existing debts. If a debtor is found to have committed certain kinds of improper conduct described in the Bankruptcy Code, the court may deny a discharge and, if it does deny the bankruptcy discharge, the purpose for which the bankruptcy was filed would be defeated.

Even if a debtor receives a discharge from the bankruptcy court, some particular debts are not discharged under the bankruptcy law. Debtors filing chapter Seven will usually be responsible for most taxes and student loans; debts incurred to pay non-dischargeable taxes; domestic support and property settlement obligations; most fines, penalties, forfeitures, and criminal restitution obligations; certain debts which are not properly listed in the bankruptcy petition; and debts for personal injury caused by operating a motor vehicle, vessel, or aircraft while intoxicated from alcohol or drugs. Also, if a creditor can prove that a debt arose from fraud, breach of fiduciary duty, or theft, or from a willful and malicious injury, the bankruptcy court may determine that the debt is not discharged.

It is possible to keep your property and still obtain a discharge of your debts in a chapter Seven bankruptcy. In a chapter Seven, a debtor can decide to reaffirm, or repay, any debt they choose. A debtor can continue to pay for house or a car while still getting rid of the rest of his or her burdensome debt.

.When filing Chapter Seven bankruptcy makes sense

Many people struggling with debt find relief by filing for Chapter Seven bankruptcy, as it may offer a quick way to get a financial restart. Chapter Seven discharges a variety of unsecured debts, so people dealing with extensive medical or credit card debt should consider speaking with a bankruptcy attorney.

The bankruptcy process is one that must be precisely followed and failing to do so may result in dismissal. A bankruptcy attorney protects his or her client from such an outcome, ensuring they meet all deadlines, file all paperwork and retain as many of his or her client’s assets as possible.

The basics of Chapter Seven

Chapter Seven is the most common choice for most people, and it’s also the fastest. Nearly all cases are resolved within six months of filing a bankruptcy petition, and many are completed within three months. Chapter Seven moves quickly because it is the simplest form of bankruptcy. Also termed liquidation, during Chapter Seven, the debtor’s assets are tallied up and, through a bankruptcy trustee, are sold to pay outstanding creditors.

That’s the basic process, but debtors can protect some or all of his or her exempt property, so they aren’t left with nothing. In fact, some states, like Texas, offer a generous list of exemptions that allow debtors to retain much of his or her property.

Once the trustee is done selling nonexempt assets and paying off creditors, any remaining unsecured debts are discharged. Creditors may object to the discharge, but have a short window to do so. This means debtors don’t have to wait long for his or her fresh start.

It is important to remember that Chapter Seven is personal bankruptcy. If any of the discharged debts have a cosigner, creditors can go after the co-signor if they do not file for bankruptcy as well. Chapter Thirteen is an alternative for people who want to protect a co-debtor from collection efforts.

Debtors must pass some eligibility requirements before they can file for Capter hapter Seven. Those eligibility requirements include:

The debtor may not have completed a Chapter Seven case in the previous eight years.

The debtor may not have completed a Chapter Thirteen case in the previous six years.

If the debtor filed a bankruptcy petition in the past one hundred and eighty days that was dismissed, they may not be eligible for Chapter Seven. This applies when dismissal was due to a failure to comply with court orders or failure to appear in court.

The debtor must also pass a means test.

The means test is used to analyze the debtor’s finances to see if significant disposable income is present. If it is, the debtor may be required to file for Chapter Thirteen instead.

The debtor must provide comprehensive information about his or her previous six months of finances. The court will look at the debtor’s income during this period, and if his or her income is below the state’s median income level, the debtor qualifies for Chapter Seven. The court will note changes in employment status, adjusting the debtor’s income accordingly. If, however, the debtor’s income is too high to qualify, the court will also look at his or her disposable income. In this instance, disposable income is defined as any income remaining after allowable expenses. Allowable expenses include things like groceries, housing, medical costs and clothing. If the debtor’s disposable income is low enough after this step, they may qualify for Chapter Seven, even with a higher overall income.

How to file for Chapter Seven bankruptcy

If a debtor does qualify for Chapter Seven, there is no barrier to start filing. It is recommended, though, that an experienced bankruptcy attorney guide this process for his or her client to ensure it is handled without error.

When filing for Chapter Seven, this is what the process looks like:

Take a bankruptcy counseling course. Before the court will allow a debtor to file for Chapter Seven, they must complete a pre-file bankruptcy counseling course. This course should be provided by a reputable nonprofit credit counseling organization, and it must be completed within 180 days of filing a bankruptcy petition. During counseling, the agency will look for alternatives to bankruptcy, and inform the debtor on what the process involves.

Complete the paperwork When a debtor files all required paperwork to the court, they are officially filing a petition for bankruptcy. An attorney will assist his or her client with this step, but the debtor will need to provide supporting documentation. The idea is to get a clear picture of the debtor’s income, assets and debts. Once the petition is filed, an automatic stay is imposed on creditors. In most cases, they cannot continue to pursue outstanding debts while this stay is in effect.

At this point, a bankruptcy trustee is appointed to the case and takes over the proceedings.

Meet with creditors Soon after the trustee takes over, they will organize a meeting between the debtor, his or her attorney and his or her creditors. During this meeting, the debtor may have to answer questions about his or her finances and information provided on bankruptcy paperwork. These questions may come from the creditors and the trustee. Following this meeting, the debtor’s eligibility for Chapter Seven is either confirmed or denied.

Property exemptions are reviewed. If the debtor is eligible for Chapter Seven, the trustee will review his or her property to determine what is exempt and what is not. In the majority of Chapter Seven cases, there are no nonexempt assets for the trustee to sell.

Take another counseling course. Before the case is discharged, the debtor must take a second financial education class. This should also be provided by a qualified credit counseling agency, and helps debtors avoid financial problems in the future.

Debts are discharge. At this point, the case is discharged, along with any outstanding eligible debts.

Within months of discharge, many people are already rebuilding and improving his or her credit. Chapter Seven can be a way back on financial track, even for those that believe there is no way to recover. There are always options for debt 0.relief, and an attorney can help his or her clients choose the best path for his or her situation. For many, that is Chapter Seven. Contact

Maryland Bankruptcy Lawyer

Understanding the Basics of Chapter 7 Bankruptcy

Financial difficulties can feel overwhelming, especially during the holiday season. However, Chapter 7 Bankruptcy offers a fresh start for those struggling with unmanageable debt. This guide will help you understand the process, evaluate eligibility, and navigate life after filing. Whether you’re considering filing or looking for recovery tips, this article equips you with the knowledge to move forward with confidence.

Chapter 7 Bankruptcy, often called liquidation bankruptcy, is one of the most common types of bankruptcy for individuals. It is aimed at individuals unable to repay unsecured debts, offering relief through asset liquidation while protecting basic necessities. By providing a fresh financial start, it acts as a lifeline for those drowning in debt.

Filing for bankruptcy under Chapter 7 involves legal procedures that ensure fairness for creditors while giving debtors the opportunity to eliminate certain debts. Understanding the key elements, steps in the process, , and potential challenges involved can empower you to navigate the process more effectively.

Defining Chapter 7 Bankruptcy and Its Purpose

Chapter 7 Bankruptcy, often called liquidation bankruptcy, is designed to help individuals and businesses eliminate unsecured debts such as credit cards and medical bills. By liquidating non-exempt assets, it provides a clean slate, allowing debtors to rebuild their finances.

It is especially beneficial for those with limited income and no feasible way to repay their debts. Chapter 7 allows a debtor to resolve financial challenges while retaining necessary property under specific exemptions. It’s a way to reset your financial situation and start fresh without the overwhelming burden of unpaid bills.

The Process of Filing for Chapter 7 Bankruptcy

When a debtor files for bankruptcy, an automatic stay is issued to halt creditor actions. A trustee is then assigned to oversee your case, liquidate non-exempt assets, and distribute proceeds to creditors. The process concludes with a discharge of eligible debts.

While the process of filing for bankruptcy may seem daunting Legal guidance and proper preparation can make it manageable. From the initial petition to the final discharge, every step is structured to help you achieve financial relief. Filing for Chapter 7 can take several months, but each step brings you closer to financial freedom.

What You Must Avoid Before Filing Chapter 7 Bankruptcy

To avoid complicatiions , a debtor considering filing for bankruptcy should refrain from maxing out credit cards, transferring assets to others, or neglecting to disclose all financial information. These actions can jeopardize your case and lead to denial of discharge or accusations of fraud.

In addition, a debtor filing bankruptcy should consult with a bankruptcy attorney before making any significant financial decisions. Transparency and honesty are critical to ensuring your case proceeds smoothly without unnecessary setbacks. A simple mistake, such as failing to include an account in your filing, can cause delays or legal challenges.

Evaluating Eligibility for Chapter 7 Bankruptcy

Eligibility for Chapter 7 Bankruptcy is determined through specific criteria that assess your financial situation. Understanding these requirements is essential to determine if this form of relief aligns with your circumstances.

Chapter 7 is designed to assist individuals who genuinely cannot repay their debts. Exploring your income, your expenses, and your financial obligations will give you a clearer picture of your eligibility and whether this is the right option for you.

The Role of Income in Determining Eligibility

Your income plays a crucial role in determining eligibility for Chapter 7. If your income is below your state’s median income, you automatically qualify. Higher earners must pass the means test.

Even if your income exceeds the median, a careful evaluation of expenses and debts can sometimes demonstrate an inability to repay creditors, qualifying you for Chapter 7. Consulting with a legal expert helps clarify your position. They can guide you through the evaluation process and ensure all necessary details are properly documented.

How Much Does It Cost for Chapter 7 Bankruptcy?

The average cost of filing ranges from one thousand dollars t three thousand dollars, including court fees and attorney fees. While this may seem expensive, it may be an investment in long-term financial relief.

Considering these costs alongside potential exemptions and dischargeable debts helps determine if Chapter 7 is the best path forward. Many find the immediate relief to be worth the cost of filing.

The Impact of Chapter 7 on Finances and Assets

Understanding how Chapter 7 affects your finances and assets is essential for informed decision-making. From discharging debts to safeguarding essential property, the implications vary based on individual circumstances.

While Chapter 7 eliminates most unsecured debts, it also involves the liquidation of non-exempt assets. Knowing what to expect can alleviate concerns and help you plan for life after bankruptcy. Preparing for this phase ensures you’re fully aware of the outcomes and benefits.

What Happens to Your Debts

Most unsecured debts, including credit card balances and medical bills, are discharged under Chapter 7. However, certain debts like student loans, child support, and taxes are typically non-dischargeable.

By eliminating eligible debts, Chapter 7 provides immediate relief, allowing you to focus on rebuilding your financial foundation. This clean slate is a significant step toward long-term stability. Understanding which debts will remain can help you prepare for managing them post-bankruptcy.

Understanding Property Exemptions

Exemptions protect essential property like your ca, your home, and personal belongings from liquidation. Federal and state laws vary, so understanding your exemptions is critical.

These exemptions ensure you retain basic necessities, preserving your ability to recover and move forward after bankruptcy. Consulting legal resources can clarify which exemptions apply to you, and knowing what you can keep allows you to face the process with confidence.

Preparing to File for Chapter 7 Bankruptcy

Thorough preparation is vital for a successful bankruptcy filing. From gathering documentation to choosing the right time, careful planning simplifies the process and minimizes potential complications.

Having a clear understanding of timelines and requirements ensures a smoother experience. By addressing key factors beforehand, you can approach filing with confidence.

Preparation for Filing

Choosing the Right Time to File

Timing can significantly impact your case. Factors like pending lawsuits, upcoming tax refunds, or changes in income should be considered when deciding when to file.

Strategic timing maximizes the benefits of filing while minimizing potential losses. Consultation with an attorney helps identify the most advantageous moment to proceed. They can also provide insights into how to prepare financially before filing.

The Role of a Trustee in Chapter 7 Bankruptcy

A trustee plays a crucial role in the bankruptcy process, ensuring compliance and facilitating the distribution of assets. Understanding their responsibilities and influence helps manage expectations.

Cooperation with the trustee and transparency are critical for achieving a successful outcome. Recognizing their role alleviates uncertainty and builds trust in the process.

Duties and Responsibilities of a Trustee

The trustee’s primary role is to review your case, liquidate any non-exempt assets, and distribute proceeds to creditors. They also ensure compliance with bankruptcy laws.

By acting as an intermediary, the trustee safeguards the process while balancing the interests of creditors and debtors. Their involvement is a cornerstone of Chapter 7 proceedings.

How the Trustee Affects Your Case

A trustee’s actions can influence the outcome of your case. Cooperation and transparency with your trustee are essential to avoid complications

. Trustees can also challenge exemptions or pursue recoverable assets, making full disclosure and legal guidance indispensable for protecting your interests. A positive working relationship with your trustee can streamline the process.

Life After Chapter 7 Bankruptcy Discharge

Life after Chapter 7 involves establishing financial stability and rebuilding your credit. Understanding post-discharge opportunities and responsibilities lays the groundwork for a new start. Contact

Maryland Bankruptcy Lawyer

With proper planning, many individuals achieve financial recovery and even improved stability within a few years. Chapter 7 is not the end but rather a new beginning. Taking proactive steps will help you rebuild your life effectively.

Rebuilding Credit Post-Bankruptcy

Rebuilding credit involves obtaining a secured credit card, paying bills on time, monitoring your credit report for inaccuracies. Consistent effort can improve your score within two years.

Gradually re-establishing creditworthiness opens doors to new financial opportunities .Persistence and patience are key to overcoming initial challenges. Avoiding high-interest loans and staying within budget are also important steps.

Strategies for Financial Stability After Discharge

Create a realistic budget, build an emergency fund, and seek financial counseling to prevent future debt problems. These steps foster long-term stability.

Incorporating healthy financial habits ensures you make the most of your fresh start. Proactive planning helps safeguard against future setbacks. Support groups or financial advisors can provide ongoing guidance.

Common Misconceptions About Chapter 7 Bankruptcy

Misunderstandings about bankruptcy often deter individuals from seeking relief. Dispelling myths fosters a clearer understanding of its benefits and limitations.

By addressing misconceptions, this section aims to encourage informed decision-making and reduce unnecessary stigma.

Debunking Myths Surrounding Bankruptcy

Many believe bankruptcy ruins lives permanently or means losing everything. In reality, it’s a legal tool for regaining control over finances while protecting essential assets.

Understanding the true purpose and impact of Chapter 7 can alleviate fear and highlight its role in financial recovery. Education is crucial for dispelling myths. Bankruptcy is a step toward relief, not failure.

Realities of the Impact on Credit and Personal Life

While bankruptcy impacts credit, it’s often less damaging than prolonged financial distress. A discharge provides an opportunity for a fresh start.

Positive outcomes. Bankruptcy is a step toward rebuilding, not an irreversible setback. With time, the benefits often outweigh the temporary challenges.

Legal Considerations and Hiring an Attorney

Navigating bankruptcy without legal guidance increases the risk of errors and complications. This section highlights the importance of expert assistance.

Choosing the right attorney ensures you make informed decisions and maximize the benefits of Chapter 7. Legal representation is an invaluable resource.

The Benefits of Legal Representation

An experienced attorney ensures proper filing, maximizes exemptions, and provides guidance throughout the process, minimizing stress and errors.

Professional expertise helps navigate complex procedures and avoid pitfalls, giving you peace of mind and confidence in your case. Your attorney is your advocate, ensuring your rights are protected.

How to Choose a Bankruptcy Attorney

Look for attorneys specializing in bankruptcy who have positive client reviews. Schedule consultations to find a professional who understands your needs.

Selecting the right attorney involves assessing qualifications, communication style, and commitment to your case. A strong attorney-client relationship is vital for success. Recommendations from trusted sources can also help guide your choice. C

Consult with a Bankruptcy Attorney

Hiring an experienced attorney ensures you’re making informed decisions tailored to your situation.

An attorney reduces stress, provides clarity, and advocates for your best interests throughout the process. Investing in legal guidance is a critical step toward financial recovery. They can also help you understand alternative options if Chapter 7 is not the best fit for your needs.

Frequently Asked Questions

Can Chapter 7 Bankruptcy Erase All Types of Debt?

No, certain debts like child support, student loans, ort, and tax obligations are typically non-dischargeable. However, most unsecured debts are eliminated.

How Often Can One File for Chapter 7 Bankruptcy?

A Chapter Seven bankruptcy can only be filed eight years after a previous bankruptcy.

What Are the Long-Term Effects of Filing for Chapter 7?

How Does Chapter 7 Bankruptcy Affect Employment Opportunities?

Maryland Chapter 7 Bankruptcy Lawyers

Approximately eighty percent of all bankruptcy cases filed are filed under Chapter 7 of the Bankruptcy Code. Chapter 7 is usually best e for most individuals and families struggling with debt in their daily lives. Chapter 7 allows for the complete elimination of covered debt so that filers emerge from bankruptcy with a clean slate, ready to make a fresh start. The board-certified bankruptcy specialists at Maryland Bankruptcy Lawyers will work with you directly to determine if Chapter 7 is right for you. If it is, we’ll get started right away and provide assistance to get you out of debt while keeping all of your assets intact. Call our Maryland bankruptcy attorneys now for a complimentary consultation to get the information you need and start today putting that crushing debt behind you.

What Our Certified Chapter 7 Specialists Can Do for You

Determine your eligibility to file Chapter 7

You do not have to wait until you are completely broke before you can get help through Chapter 7.

The primary factor determining Chapter 7 eligibility is your income. Chapter 7 is automatically available to filers whose monthly income is below the state median income for their household size. If your income is above the state median, you might still qualify for Chapter 7, but you have to take a means test that calculates your disposable income after considering your household expenses and other financial obligations.

Another factor in determining Chapter 7 eligibility is determining whether your assets are exempt under the applicable state exemptions. If your assets exceed the available exemptions, our attorneys may be able to help you with proper pre-petition planning to allow you to properly exempt and keep your assets.

Other qualifications for Chapter 7 include obtaining credit counseling, and there are eligibility rules regarding whether you have had a prior bankruptcy petition dismissed or received a previous bankruptcy discharge in a certain recent period.

Our bankruptcy experts will examine your eligibility for Chapter 7 and walk you through all the required steps for filing. . Contact Maryland Bankruptcy Lawyer for help.

No Asset Bankruptcy Filings

Get the Right Kind of Help That Benefits You the Most

If you do not qualify for Chapter 7 based on your income, if you have non-exempt property you wish to keep, or if your biggest debts are mostly secured, then you might benefit more from Chapter 13 than Chapter 7. At, our bankruptcy law office, our experts can easily identify which form of bankruptcy is best for you or if you would benefit instead from a nonbankruptcy solution like debt settlement. A pro bono bankruptcy is a bankruptcy without a lawyer. Alternatives to Chapter 7

Debtors should be aware that there are several alternatives to chapter 7 relief. For example, debtors who are engaged in business, including corporations, partnerships, and sole proprietorships, may prefer to remain in business and avoid liquidation. Such debtors should consider filing a petition under chapter 11 of the Bankruptcy Code. Under chapter 11, the debtor may seek an adjustment of debts, either by reducing the debt or by extending the time for repayment, or may seek a more comprehensive reorganization. Sole proprietorships may also be eligible for relief under chapter 13 of the Bankruptcy Code.

In addition, individual debtors who have regular income may seek an adjustment of debts under chapter 13 of the Bankruptcy Code. A particular advantage of chapter 13 is that it provides individual debtors with an opportunity to save their homes from foreclosure by allowing them to catch up past due payments through a payment plan. Moreover, the court may dismiss a chapter 7 case filed by an individual whose debts are primarily consumer rather than business debts if the court finds that the granting of relief would be an abuse of chapter 7. 11 U.S.C. § 707 b .

If the debtor's current monthly income is more than the state median, the Bankruptcy Code requires application of a means test to determine whether the chapter 7 filing is presumptively abusive. Abuse is presumed if the debtor's current monthly income over 5 years, net of certain statutorily allowed expenses and secured debt payments, is not less than the lesser of i 25% of the debtor's nonpriority unsecured debt, or $9,075, whichever is greater, or ii $15,150. The debtor may rebut a presumption of abuse only by a showing of special circumstances that justify additional expenses or adjustments of current monthly income.

Debtors should also be aware that out-of-court agreements with creditors or debt counseling services may provide an alternative to a bankruptcy filing.

Background

A chapter 7 bankruptcy case does not involve the filing of a plan of repayment as in chapter 13. Instead, the bankruptcy trustee gathers and sells the debtor's nonexempt assets and uses the proceeds of such assets to pay holders of claims creditors in accordance with the provisions of the Bankruptcy Code. Part of the debtor's property may be subject to liens and mortgages that pledge the property to other creditors. In addition, the Bankruptcy Code will allow the debtor to keep certain exempt property; but a trustee will liquidate the debtor's remaining assets. Accordingly, potential debtors should realize that the filing of a petition under chapter 7 may result in the loss of property.

Chapter 7 Eligibility

To qualify for relief under chapter 7 of the Bankruptcy Code, the debtor may be an individual, a partnership, or a corporation or other business entity. 11 U.S.C. §§ 101 41 , 109 b . Subject to the means test described above for individual debtors, relief is available under chapter 7 irrespective of the amount of the debtor's debts or whether the debtor is solvent or insolvent. An individual cannot file under chapter 7 or any other chapter, however, if during the preceding 180 days a prior bankruptcy petition was dismissed due to the debtor's willful failure to appear before the court or comply with orders of the court, or the debtor voluntarily dismissed the previous case after creditors sought relief from the bankruptcy court to recover property upon which they hold liens. 11 U.S.C. §§ 109 g , 362 d and e . In addition, no individual may be a debtor under chapter 7 or any chapter of the Bankruptcy Code unless he or she has, within 180 days before filing, received credit counseling from an approved credit counseling agency either in an individual or group briefing. 11 U.S.C. §§ 109, 111. There are exceptions in emergency situations or where the U.S. trustee or bankruptcy administrator has determined that there are insufficient approved agencies to provide the required counseling. If a debt management plan is developed during required credit counseling, it must be filed with the court.

One of the primary purposes of bankruptcy is to discharge certain debts to give an honest individual debtor a fresh start. The debtor has no liability for discharged debts. In a chapter 7 case, however, a discharge is only available to individual debtors, not to partnerships or corporations. 11 U.S.C. § 727 a 1 . Although an individual chapter 7 case usually results in a discharge of debts, the right to a discharge is not absolute, and some types of debts are not discharged. Moreover, a bankruptcy discharge does not extinguish a lien on property

. How Chapter 7 Works

A chapter 7 case begins with the debtor filing a petition with the bankruptcy court serving the area where the individual lives or where the business debtor is organized or has its principal place of business or principal assets. 3 In addition to the petition, the debtor must also file with the court: 1 schedules of assets and liabilities; 2 a schedule of current income and expenditures; 3 a statement of financial affairs; and 4 a schedule of executory contracts and unexpired leases. Fed. R. Bankr. P. 1007 b . Debtors must also provide the assigned case trustee with a copy of the tax return or transcripts for the most recent tax year as well as tax returns filed during the case including tax returns for prior years that had not been filed when the case began . 11 U.S.C. § 521. Individual debtors with primarily consumer debts have additional document filing requirements. They must file: a certificate of credit counseling and a copy of any debt repayment plan developed through credit counseling; evidence of payment from employers, if any, received 60 days before filing; a statement of monthly net income and any anticipated increase in income or expenses after filing; and a record of any interest the debtor has in federal or state qualified education or tuition accounts. Id. A husband and wife may file a joint petition or individual petitions. 11 U.S.C. § 302 a . Even if filing jointly, a husband and wife are subject to all the document filing requirements of individual debtors. The Official Forms may be purchased at legal stationery stores or. They are not available from the court.

The courts must charge a $245 case filing fee, a $75 miscellaneous administrative fee, and a $15 trustee surcharge. Normally, the fees must be paid to the clerk of the court upon filing. With the court's permission, however, individual debtors may pay in installments. 28 U.S.C. § 1930 a ; Fed. R. Bankr. P. 1006 b ; Bankruptcy Court Miscellaneous Fee Schedule, Item 8. The number of installments is limited to four, and the debtor must make the final installment no later than 120 days after filing the petition. Fed. R. Bankr. P. 1006. For cause shown, the court may extend the time of any installment, provided that the last installment is paid not later than 180 days after filing the petition. Id. The debtor may also pay the $75 administrative fee and the $15 trustee surcharge in installments. If a joint petition is filed, only one filing fee, one administrative fee, and one trustee surcharge are charged. Debtors should be aware that failure to pay these fees may result in dismissal of the case. 11 U.S.C. § 707 a .

If the debtor's income is less than 150% of the poverty level as defined in the Bankruptcy Code , and the debtor is unable to pay the chapter 7 fees even in installments, the court may waive the requirement that the fees be paid. 28 U.S.C. § 1930 f

In order to complete the Official Bankruptcy Forms that make up the petition, statement of financial affairs, and schedules, the debtor must provide the following information:

A list of all creditors and the amount and nature of their claims;

The source, amount, and frequency of the debtor's income;

A list of all of the debtor's property; and

Married individuals must gather this information for their spouse regardless of whether they are filing a joint petition, separate individual petitions, or even if only one spouse is filing. In a situation where only one spouse files, the income and expenses of the non-filing spouse are required so that the court, the trustee and creditors can evaluate the household's financial position. Contact

Maryland Bankruptcy Attorney

Among the schedules that an individual debtor will file is a schedule of exempt property. The Bankruptcy Code allows an individual debtor 4 to protect some property from the claims of creditors because it is exempt under federal bankruptcy law or under the laws of the debtor's home state. 11 U.S.C. § 522 b . Many states have taken advantage of a provision in the Bankruptcy Code that permits each state to adopt its own exemption law in place of the federal exemptions. In other jurisdictions, the individual debtor has the option of choosing between a federal package of exemptions or the exemptions available under state law. Thus, whether certain property is exempt and may be kept by the debtor is often a question of state law. The debtor should consult an attorney to determine the exemptions available in the state where the debtor lives.

Filing a petition under chapter 7 automatically stays stops most collection actions against the debtor or the debtor's property. 11 U.S.C. § 362. But filing the petition does not stay certain types of actions listed under 11 U.S.C. § 362 b , and the stay may be effective only for a short time in some situations. The stay arises by operation of law and requires no judicial action. As long as the stay is in effect, creditors generally may not initiate or continue lawsuits, wage garnishments, or even telephone calls demanding payments. The bankruptcy clerk gives notice of the bankruptcy case to all creditors whose names and addresses are provided by the debtor.

Between 21 and 40 days after the petition is filed, the case trustee described below will hold a meeting of creditors. If the U.S. trustee or bankruptcy administrator 5 schedules the meeting at a place that does not have regular U.S. trustee or bankruptcy administrator staffing, the meeting may be held no more than 60 days after the order for relief. Fed. R. Bankr. P. 2003 a . During this meeting, the trustee puts the debtor under oath, and both the trustee and creditors may ask questions. The debtor must attend the meeting and answer questions regarding the debtor's financial affairs and property. 11 U.S.C. § 343. If a husband and wife have filed a joint petition, they both must attend the creditors' meeting and answer questions. Within 10 days of the creditors' meeting, the U.S. trustee will report to the court whether the case should be presumed to be an abuse under the means test described in 11 U.S.C. § 704 b .

It is important for the debtor to cooperate with the trustee and to provide any financial records or documents that the trustee requests. The Bankruptcy Code requires the trustee to ask the debtor questions at the meeting of creditors to ensure that the debtor is aware of the potential consequences of seeking a discharge in bankruptcy such as the effect on credit history, the ability to file a petition under a different chapter, the effect of receiving a discharge, and the effect of reaffirming a debt. Some trustees provide written information on these topics at or before the meeting to ensure that the debtor is aware of this information. In order to preserve their independent judgment, bankruptcy judges are prohibited from attending the meeting of creditors. 11 U.S.C. § 341 c .

In order to accord the debtor complete relief, the Bankruptcy Code allows the debtor to convert a chapter 7 case to a case under chapter 11, 12, or 13 6 as long as the debtor is eligible to be a debtor under the new chapter. However, a condition of the debtor's voluntary conversion is that the case has not previously been converted to chapter 7 from another chapter. 11 U.S.C. § 706 a . Thus, the debtor will not be permitted to convert the case repeatedly from one chapter to another. A pro bono bankruptcy is a bankruptcy without an attorney.

Role of the Case Trustee

When a chapter 7 petition is filed, the U.S. trustee or the bankruptcy court in Alabama and North Carolina appoints an impartial case trustee to administer the case and liquidate the debtor's nonexempt assets. 11 U.S.C. §§ 701, 704. If all the debtor's assets are exempt or subject to valid liens, the trustee will normally file a no asset report with the court, and there will be no distribution to unsecured creditors. Most chapter 7 cases involving individual debtors are no asset cases. But if the case appears to be an asset case at the outset, unsecured creditors 7 must file their claims with the court within 90 days after the first date set for the meeting of creditors. Fed. R. Bankr. P. 3002 c . A governmental unit, however, has 180 days from the date the case is filed to file a claim. 11 U.S.C. § 502 b 9 . In the typical no asset chapter 7 case, there is no need for creditors to file proofs of claim because there will be no distribution. If the trustee later recovers assets for distribution to unsecured creditors, the Bankruptcy Court will provide notice to creditors and will allow additional time to file proofs of claim. Although a secured creditor does not need to file a proof of claim in a chapter 7 case to preserve its security interest or lien, there may be other reasons to file a claim. A creditor in a chapter 7 case who has a lien on the debtor's property should consult an attorney for advice.

Commencement of a bankruptcy case creates an estate. The estate technically becomes the temporary legal owner of all the debtor's property. It consists of all legal or equitable interests of the debtor in property as of the commencement of the case, including property owned or held by another person if the debtor has an interest in the property. Generally speaking, the debtor's creditors are paid from nonexempt property of the estate.

The primary role of a chapter 7 trustee in an asset case is to liquidate the debtor's nonexempt assets in a manner that maximizes the return to the debtor's unsecured creditors. The trustee accomplishes this by selling the debtor's property if it is free and clear of liens as long as the property is not exempt or if it is worth more than any security interest or lien attached to the property and any exemption that the debtor holds in the property. The trustee may also attempt to recover money or property under the trustee's avoiding powers. The trustee's avoiding powers include the power to: set aside preferential transfers made to creditors within 90 days before the petition; undo security interests and other prepetition transfers of property that were not properly perfected under nonbankruptcy law at the time of the petition; and pursue nonbankruptcy claims such as fraudulent conveyance and bulk transfer remedies available under state law. In addition, if the debtor is a business, the bankruptcy court may authorize the trustee to operate the business for a limited period of time, if such operation will benefit creditors and enhance the liquidation of the estate. 11 U.S.C. § 721.

Section 726 of the Bankruptcy Code governs the distribution of the property of the estate. Under § 726, there are six classes of claims; and each class must be paid in full before the next lower class is paid anything. The debtor is only paid if all other classes of claims have been paid in full. Accordingly, the debtor is not particularly interested in the trustee's disposition of the estate assets, except with respect to the payment of those debts which for some reason are not dischargeable in the bankruptcy case. The individual debtor's primary concerns in a chapter 7 case are to retain exempt property and to receive a discharge that covers as many debts as possible.

The Chapter 7 Discharge

A discharge releases individual debtors from personal liability for most debts and prevents the creditors owed those debts from taking any collection actions against the debtor. Because a chapter 7 discharge is subject to many exceptions, debtors should consult competent legal counsel before filing to discuss the scope of the discharge. Generally, excluding cases that are dismissed or converted, individual debtors receive a discharge in more than 99 percent of chapter 7 cases. In most cases, unless a party in interest files a complaint objecting to the discharge or a motion to extend the time to object, the bankruptcy court will issue a discharge order relatively early in the case. Contact

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The grounds for denying an individual debtor a discharge in a chapter 7 case are narrow and are construed against the moving party. Among other reasons, the court may deny the debtor a discharge if it finds that the debtor: failed to keep or produce adequate books or financial records; failed to explain satisfactorily any loss of assets; committed a bankruptcy crime such as perjury; failed to obey a lawful order of the bankruptcy court; fraudulently transferred, concealed, or destroyed property that would have become property of the estate; or failed to complete an approved instructional course concerning financial management. 11 U.S.C. § 727; Fed. R. Bankr. P. 4005. The pro bono bankruptcy is a bankruptcy without an attorney.

Secured creditors may retain some rights to seize property securing an underlying debt even after a discharge is granted. Depending on individual circumstances, if a debtor wishes to keep certain secured property such as an automobile , he or she may decide to reaffirm the debt. A reaffirmation is an agreement between the debtor and the creditor that the debtor will remain liable and will pay all or a portion of the money owed, even though the debt would otherwise be discharged in the bankruptcy. In return, the creditor promises that it will not repossess or take back the automobile or other property so long as the debtor continues to pay the debt.

If the debtor decides to reaffirm a debt, he or she must do so before the discharge is entered. The debtor must sign a written reaffirmation agreement and file it with the court. 11 U.S.C. § 524 c . The Bankruptcy Code requires that reaffirmation agreements contain an extensive set of disclosures described in 11 U.S.C. § 524 k . Among other things, the disclosures must advise the debtor of the amount of the debt being reaffirmed and how it is calculated and that reaffirmation means that the debtor's personal liability for that debt will not be discharged in the bankruptcy. The disclosures also require the debtor to sign and file a statement of his or her current income and expenses which shows that the balance of income paying expenses is sufficient to pay the reaffirmed debt. If the balance is not enough to pay the debt to be reaffirmed, there is a presumption of undue hardship, and the court may decide not to approve the reaffirmation agreement. Unless the debtor is represented by an attorney, the bankruptcy judge must approve the reaffirmation agreement.

If the debtor was represented by an attorney in connection with the reaffirmation agreement, the attorney must certify in writing that he or she advised the debtor of the legal effect and consequences of the agreement, including a default under the agreement. The attorney must also certify that the debtor was fully informed and voluntarily made the agreement and that reaffirmation of the debt will not create an undue hardship for the debtor or the debtor's dependents. 11 U.S.C. § 524 k . The Bankruptcy Code requires a reaffirmation hearing if the debtor has not been represented by an attorney during the negotiating of the agreement, or if the court disapproves the reaffirmation agreement. Call

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An individual receives a discharge for most of his or her debts in a chapter 7 bankruptcy case. A creditor may no longer initiate or continue any legal or other action against the debtor to collect a discharged debt. But not all of an individual's debts are discharged in chapter 7. Debts not discharged include debts for alimony and child support, certain taxes, debts for certain educational benefit overpayments or loans made or guaranteed by a governmental unit, debts for willful and malicious injury by the debtor to another entity or to the property of another entity, debts for death or personal injury caused by the debtor's operation of a motor vehicle while the debtor was intoxicated from alcohol or other substances, and debts for certain criminal restitution orders. 11 U.S.C. § 523 a . The debtor will continue to be liable for these types of debts to the extent that they are not paid in the chapter 7 case. Debts for money or property obtained by false pretenses, debts for fraud or defalcation while acting in a fiduciary capacity, and debts for willful and malicious injury by the debtor to another entity or to the property of another entity will be discharged unless a creditor timely files and prevails in an action to have such debts declared nondischargeable. 11 U.S.C. § 523 c ; Fed. R. Bankr. P. 4007 c .

The court may revoke a chapter 7 discharge on the request of the trustee, a creditor, or the U.S. trustee if the discharge was obtained through fraud by the debtor, if the debtor acquired property that is property of the estate and knowingly and fraudulently failed to report the acquisition of such property or to surrender the property to the trustee, or if the debtor without a satisfactory explanation makes a material misstatement or fails to provide documents or other information in connection with an audit of the debtor's case. 11 U.S.C. § 727 d

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The test establishes that the debtor has to disclose all income that is earned during the 6 month period prior to the filing. The next step is to all up all of the income from all sources in the debtor's household including all member's of the household.

There are special tpes of inocme that do not have to be inlcuded such as social security tha are not included in the calculations..

Once there is a determination, it needs to be compared to the figures in the statute