What is Chapter 7 Bankruptcy

One of the scariest situations a person or business can deal with is bankruptcy. One of the scariest situations a person or business can deal with is bankruptcy.  Bankruptcy brings to mind ruined credit, tarnished reputations as well as a long rebuilding process. To the contrary, bankruptcy gives you a chance to get your finances under control so that you can take charge of your life.

If you are dodging bill collectors, making minimum payments on credit cards or using credit cards to pay for everyday needs like gas and groceries, then a bankruptcy filing could be your best option. The first step is to determine whether a bankruptcy is right for you by scheduling your free consultation with a Chapter 7 bankruptcy attorney at Wagner Law Office, P.C.  We want to help you make good decisions and get your financial life back on track.

How to File a Chapter 7 Bankruptcy

There are various reasons why a debtor files for bankruptcy, (i.e., garnishment, divorce, credit cards payments, loss of income, medical, etc.), and each situation requires a different strategy.  Therefore, Wagner Law Office takes the time to properly evaluate the relevant circumstances including income and other financial documents to determine the likelihood of a successful Chapter 7 Bankruptcy.  Our office will thereafter prepare the various documents that must be filed and we will strategize the best timing for filing the case with the Bankruptcy Court.

The “Means Test”

A debtor does not simply get to choose to file for a Chapter 7 Bankruptcy; rather, he must be eligible to do so. The Means Test is a mathematical equation invented by Congress which helps determine whether a debtor actually qualifies for a Chapter 7 Bankruptcy.  People who pass the Means Test generally file a Chapter 7 Bankruptcy. People who do not pass the Means Test generally file a Chapter 13 Bankruptcy. Of course, just because you can file a Chapter 7 Bankruptcy doesn’t mean you should. Wagner Law Office will assist you in making a good decision for you and your family.

Meeting of Creditors

Once a Chapter 7 Bankruptcy paperwork is filed, the Meeting of Creditors is scheduled by the Bankruptcy Court.  All of the debtor’s creditors receive an “invitation” to the meeting, at which time the bankruptcy trustee will ask the debtor numerous questions about assets, financial transactions and the debts owed. The focus of this meeting is to ascertain if the documentation has been filled out accurately and to determine what assets are available for liquidation. All creditors are also allowed to ask questions while the debtor is under oath.  Wagner Law Office prides itself on ensuring that its clients are fully prepared to respond to all questions about the Chapter 7 Bankruptcy filing.

The Discharge of Debt

The goal is not to file a bankruptcy.  The goal is to receive a discharge order from the Bankruptcy Court.  When the bankruptcy case is proceeding as it should, the bankruptcy court will enter the discharge order about 4 months after the case was originally filed.  The discharge order effectively means the bankruptcy worked; however, there are some automatic exceptions to discharge such as most income taxes, student loans as well as child and spousal support.  All of your other creditors can object to a debtor’s discharge by filing a written complaint with the Bankruptcy Court alleging fraud or deceit. If the creditors fail to timely file the written complaint, then the debt will be discharged.  The discharge legally keeps creditors from coming back and collecting on debt that was incurred prior to filing for bankruptcy.